- Conspiracy of Fools
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Conspiracy of Fools is a book by Kurt Eichenwald detailing the Enron scandal. It was published in 2005 when Eichenwald was a business journalist with The New York Times.
Synopsis
Conspiracy of Fools tells the story of the 2001 collapse of Enron.
Eichenwald was assisted by a small staff of professional research assistants who helped him sort through the volumes of interviews, press reports and legal documents from the infamous corporate collapse.
Enron's Chief Financial Officer (CFO) Andrew Fastow is depicted as voraciously greedy, using front corporations and partnerships, paying himself "management" and "consultant" fees as if he were an outsider, and, in the process, cooking Enron's books to show fictitious profits. The book goes back to the 1980s to point out some questionable activities of Enron during that time, but the bulk of the book occurs from 1997 onward as the major events that led to Enron's collapse occur.
In addition to the story of Fastow, Eichenwald tells the stories of the complicity of Enron's accountants (at Arthur Andersen), their lawyers (internal and external), the senior management (Kenneth Lay and Jeffrey Skilling), Fastow's partner in many of his deals, Michael Kopper, and Enron's board.
The picture that emerges of Enron is that of an out-of-control corporate culture that ignored the basic principles of business, allowing it to be manipulated by greedy incompetents for their own personal gain. The focus on reporting profits—rather than actually making money—created a situation that both encouraged and enabled a small group of insider criminals to "game the system." Enron's business losses were masked by accounting tricks, while the insiders raked off huge "profits" for themselves.
The game, Eichenwald reports, was eventually undone by huge losses, bad investments and the structure of the outside partnerships themselves, the solvency of which depended on ever-rising Enron stock prices. When Enron's stock began to fall, the financial structures imploded, leaving Enron with billions of dollars in losses and few assets.
See also
Related Books and Films
- The Corporation (2003) -- documentary film about the concept of the corporation
- Enron: The Smartest Guys in the Room (2005) -- film depicting the rise and fall of Enron, based on the book Smartest Guys in the Room (2003) by Bethany McLean and Peter Elkind
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