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foreclosure of a dream: enron's mirage of corporate invincibility by Alex Burns (alex@disinfo.com) - January 21, 2002 |
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| Enron seemed like the perfect case study for corporate excellence. Formed from the 1985 merger of Houston Natural Gas and InterNorth, Enron became a powerhouse in the US utilities industry and a darling of S&P investors. Its CEOs lobbied Congress for regulatory changes, spearheaded Enron's global expansion and were touted as superstar material. They created markets where none existed, motivated employees with the free-market gospel and won acclaim from the business press. Enron seemed invincible. But just as the firms profiled Tom Peters and Robert Waterman's influential study In Search of Excellence (New York: Warner Books, 1982) fell from grace, Enron's corporate excellence was exposed as a deceitful mirage when it filed for bankruptcy (6 December 2001). Enron's dubious accounting practices have implicated Arthur Andersen, its auditor, and the other Big Five firms. Management divested stock while hiding the company's true financial position from its employees (who were forced to invest their retirement benefits in company stock plans). Anti-globalist critics have seized on Enron's expansion into India and allegations (Amnesty International and Human Rights Watch) of human rights violations by Enron's private police force as proof of corporate malpractices. Democrat strategists and at least eight House and Senate committees plan to explore the further implications. The fallout from Enron's collapse has already led to President George W. Bush (CEO Ken Lay is friends of the Bush family and Enron's employees contributed $1.3 million to his 2000 campaign). Each major business cycle has its major villains, who are now joined by Enron. Think Michael Millken and Barings rogue trader Nick Leeson (junk bonds) or the high-profile CEOs of dotcom consultancies (the New Economy). The uber-Spencerian "survival of the fittest" orthodoxy that underpins most forms of globalist rhetoric is unlikely to be dethroned, since analysts have already countered the flak from headlines and the media frenzy. Those who can look beyond the new cabal of careerist politicians and defensive flak containment can still learn some important lessons. The first lesson is that real power lies in understanding the auditing procedures of the Securities and Exchanges Commission and the Big Five's global best practices. The credit-rating agencies Moody's and Standard & Poor's, a virtual oligopoly, will remain powerful. The real subversives in today's business climate already understand the power of psychographic tools and spreadsheets to devise new markets and create un-glimpsed realities. Ditch your dog-eared H.P. Lovecraft books for an equally arcane book on business models (try Adrian Slywotzky) or actuarial tables. The second lesson extends the first: language influences the perceptions of business analysts and defines how employees "operationalize" their day-to-day actions. Enron's staff were affected by Ken Lay and Jeffrey Skilling's charismatic leadership, the lure of money, and a stake in creating the future. The Federal Energy Regulatory Commission was swayed by the "logic" of deregulated utility markets. Journalists were won over by humanistic techniques and neo-biological techno-speak. Stock traders embraced desperation chic. Natural resources are being increasingly 'virtualized' into private commodities. Staying awake in a rapidly changing "business ecosystem" means using language as camouflage, knowing what to really look for and where to find the hidden truths. Finally, the business press, which increasingly relies on advertising to off-set production costs, failed to warn employees, investors and the general public. Individual journalists foresaw Enron’s drift from the fundamentals and alarms were sounded in specific pieces. The Fourth Estate's interrogatory role has been abdicated in favour of eye-catching sound-bites and front-cover interviews. This systemic problem is duplicated by the conflicts of interest that have ensnared Enron's auditor and Ken Lay's political networks. Maybe business editors need to embrace some of Joseph Schumpeter's "creative destruction" instead of just writing about it. When the newspaper ink has dried, the Enron collapse will still remain amongst the most devastating falls of a Fortune 500 company in American corporate history. CEO Ken Lay will not be considered in the league of Jack Welch, whose corporate hagiography reached best-seller lists. The unanswered allegations and questions are legion. Employees faced the foreclosure of a dream when Enron filed for bankruptcy. The rest of us saw a fleeting glimpse of the corporate chicanery that may create a dystopian 21st century. The views expressed above represent the writer and not necessarily those of The Disinformation Company Ltd. |
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Enron Enron Company Profile Enron Is Dead. Long Live Enron Why Enron Went Bust May We Offer You Our Net Business? America’s Largest Bankruptcy From the Ashes of Enron: Better Markets? Murky Accounting on Wall Street Enron: Now the IRS Joins the Hunt The Enron Scandal – Why Was No One Minding the Store? Enron: Pulling the Plug on Corporate Power The Man Who Screwed the World One Number That Won't Lie The Boardroom Follies Caught Off Balance Enron: The Democratic Battle Cry! Eight Questions for Bush about Enron Democrats Split on Enron White House Aide Knew About Enron Hot Potato: Playing Politics with Enron Future Boy: Trading Places Lay Men Will Bush be Tarnished by Enron’s Collapse? Bush’s Enron Ties Enron, We Hardly Knew Ye Compassionate Conservatives vs. Enron Conservatives Two Lessons from the Enron Debacle The Disease! It’s Spreading! Enron Fallout: Wide, But Not Deep Enron’s Power Crisis Ken, Lay Your Cards on the Table Lights Out for Enron? Is Enron Overpriced? What’s in a (Hip, Hip) New Name? The Real Threat to America’s Power Does an Enron Lurk in Your Stock Portfolio? One, two, Many Enron Fields! Enron’s Cow Disinformation Dossier on Old Tricks In The New Economy Disinformation Dossier on Corporate Religions |
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