- Houston provided the stage for the energy
giant's meteoric rise - and the crash that will reverberate for years.
Philip Delves Broughton reports
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- Enron was a company in love with itself.
Office affairs were rampant, divorce among senior executives an epidemic,
and stories of couples steaming up glass-walled offices after late-night
meetings were the talk of Houston.
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- "It was insane," says a former
energy trader, soothing her financial injuries with a margarita.
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- "There were no rules for people,
even in our personal lives. Everything was about the company and everything
was supposed to be on the edge - sex, money, all of it."
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- But the music has suddenly stopped. Savings
and pensions have been wiped out, careers destroyed and America's version
of free-market capitalism dragged into the interrogation room.
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- The reverberations of Enron's collapse
will be felt for years in Washington, where the political witch-hunt is
gaining pace, and on Wall Street, but nowhere more so than in Houston,
the stage for Enron's gaudy act.
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- From the mid-1980s, when Enron was created
by the merger of two energy companies, Houston became its town. The company
filled the void left by the oil companies, whose buccaneering days had
been ended by the collapse in oil prices.
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- In River Oaks, the smartest suburb of
Houston, home to the likes of the former president, George Bush, Enron
executives began building huge mansions.
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- Jeff Skilling, the executive who transformed
Enron under the more genteel rule of Ken Lay, the former chief executive,
decorated his house all black and white, Enron's corporate colours, from
the marble to the sofas to the flowers, wallpaper and pictures.
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- The Enron wives became known around town
for their Mercedes, fur-trimmed sweaters and leather trousers.
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- But in the excitement, Enron lost touch
with its mortality. Skilling wanted it to become an alternative to the
Wall Street banks.
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- He wanted to recruit the best, which
meant persuading the leading business school graduates, from places such
as Harvard and Stanford, to choose Houston over New York or Silicon Valley.
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- He did so by creating the same culture
of unself-conscious greed and reward which Wall Street was forced to suppress
by the insider-trading scandals of the late 1980s. He built his own Bonfire
of The Vanities in Houston and everyone wanted to feel its warmth.
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- Managers employed a system known as "rank
or yank". Every employee's performance was ranked 1-5. Five meant
you were out. The bottom 15 per cent of workers were fired each year.
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- For the best workers the incentives were
staggering. Bonus day was known at the company as Car Day, because of the
lines of extraordinary sports cars arriving for the most successful employees.
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- To the outside world, Enron described
itself as a family for which employees were delighted to work punishing
hours. Inside it became increasingly incestuous, sexually and financially.
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- While the accountants came up with schemes
for Enron to credit itself with vast and phoney profits to look good on
Wall Street, the traders and consultants, often new to Texas, found themselves
immersed in the Enron culture.
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- Only those at the top and the traders
who saw the kinds of wild bets Enron was placing, on everything from oil
to the weather, saw how precarious the whole thing was. They knew it was
a house of cards and began pulling out as much money as they could.
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- The best brains began demanding vast
salaries to stay and, to save face, Skilling paid them. Then they asked
for more. Senior executives began selling their shares in huge blocks.
Everyone at the top was cashing out while those further down believed the
hype.
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- "We all thrived on the buzz,"
said Mark Lindquist, 39, a web designer who lost his £39,000-a-year
job and is now struggling to pay for his autistic son's treatment. "It
seemed like we were part of something incredible."
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- More than two thirds of Americans now
believe that the Bush administration is either hiding something or lying
about its relationship with Enron, according to a CBS-New York Times poll.
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- Although no allegations of wrongdoing
have been made against the White House, the poll underlined the political
damage that could be inflicted on Mr Bush by the collapse of Enron, which
was a major contributor to his presidential election campaign.
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- A post mortem examination at the weekend
confirmed that Clifford Baxter, 43, whose death on Friday escalated the
scandal, had shot himself with a revolver. Mr Baxter resigned as Enron
vice-chairman last May after clashing with fellow executives over the company's
practices.
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- http://www.telegraph.co.uk/news/mai
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