Enron Ever After

Ten years ago this month, the company that once dominated Houston collapsed in a cloud of debt. But its ghost still haunts the city—and America.

In mid-October, someone sent me a listing for a condominium in a cushy Houston high-rise that was for sale at the reduced price of $6.9 million, a full 20 percent off. At more than 12,000 square feet, the condo was, according to the description, a “magnificent Italian Renaissance–inspired” residence with four bedrooms, four full and five half baths, Houston views “in all directions,” and “ten privately owned underground parking spaces in premier locations” (this in addition to valets at the ready 24/7). Fountains flowed on balconies planted with caladiums. There was a billiards room, a separate family room with a marble fireplace surround, and much, much more. “This unrivaled masterpiece exemplifies artisan craftsmanship throughout,” the listing continued, and, indeed, the vaulted brick ceiling in the kitchen, the rough-hewn, possibly hand-carved beams in the family room, and the abundant brocade evoked Renaissance royalty, or at least people who yearned to be viewed as such. This was, after all, a place with nine toilets. The owners, despite their obvious wealth and power, seemed to require constant reminders of both.

The finicky former king and queen of this palazzo in the air were none other than the late Ken Lay and his wife, Linda, who actually had been Houston royalty during the city’s Enron era, when Ken was CEO. The real estate photos of their home inspired me to imagine Lay, sometime just before the guilty verdict in his 2006 securities fraud trial, standing on one of his four prohibitively expensive balconies, alone. The fountains would be burbling hundreds of feet above the traffic dancing in and out of River Oaks while he gazed at the city below, knowing, because even someone as optimistic as he was would have known, that he was a goner. Born into a poor family, Lay became the kind of CEO who insisted on drinking his daily coffee from fine china and who once sent his corporate jet to fetch his daughter’s furniture home—from the South of France. But then the entire world Lay had built—from the seemingly thriving global energy company to friendships with U.S. presidents to the de facto mayorship of Houston—vanished, first in a sea of prosecution and then in the wake of his own death, which occurred on a post-verdict stay at a lavish ranch in Colorado.

Ten years after Enron collapsed on a cold, rainy December day, however, the memory, not to mention the schadenfreude, still lingers. You would think that after all the headlines, trials, jail terms, legal settlements, and untimely deaths, the company’s ghost could be put to rest, particularly in a city that prides itself on looking forward and has a serious aversion to global embarrassment. “You’re going to pick at the scab,” a friend with Enron connections chided when I called for a chat; she, like a lot of people who experienced the company’s collapse personally, has been more than happy to move on. But she can’t, really, and neither can Houston. Even a decade later, it is still easy to be drawn into all sorts of Enron debates, like whether it was or was not a “real” company—as opposed to, say, a wild casino run by delusional, greed-crazed traders. People still argue over whether Jeff Skilling, Enron’s president, did or did not deserve such a lengthy prison sentence for something that either was or was not truly illegal. There are even those who believe that Lay is alive somewhere, with a new face and his fortune intact.

Part of the reason Enron remains with us is that it was such a local story, and so many of the players are still around. Rich Kinder, who left the company in 1996 when Lay refused to turn over the reins in a timely fashion, now runs an immensely successful pipeline company, Kinder Morgan, with several former Enron execs. Kinder and his wife, Nancy, who was for a time Lay’s invaluable executive assistant, inhabit the most rarefied echelon of Houston society. The same is true of John Arnold; once a trading prodigy at Enron, he now has his own hedge fund and, with his wife, Laura, the requisite philanthropic foundation. Skilling continues to appeal his 24-year sentence from his prison cell in Englewood, Colorado, but Andy Fastow, certainly the most useless CFO in history, was transferred earlier this year from prison to a halfway house to finish his 6-year sentence for wire and securities fraud. His wife, Lea, a former Enron assistant treasurer who also was incarcerated for her part in the scandal, has already begun to reemerge in the city’s social circles—under her maiden name. Sherron Watkins, who famously warned the oblivious Lay that he was facing a wave of accounting scandals, earns a nice living giving speeches on corporate governance around the world. And literally hundreds of other people are back cheering on their kids at West University Little League games and jockeying for space in the carpool line at various elite private schools.

But as localized as Enron was, its staying power comes from the fact that it was also, unfortunately, a national story, the first act of an American tragedy. Initially, after Skilling was sent to jail and Lay was laid to rest, Enron could be written off as an anomaly, a bunch of Texas yahoos run amuck. But then came WorldCom, Tyco, HealthSouth, and more, followed by the mortgage crisis and the great financial meltdown, and Enron began to seem like the proverbial canary in the coal mine. As Bethany McLean, the co-author of The Smartest Guys in the Room, noted in the Guardian in 2008, just as Enron executives were more than willing to sell clients bad investments rolled into a private equity fund, so too were Wall Street firms willing to package worthless home mortgages into glamorous financial instruments. Enron knew how to keep its ever-growing debt off its balance sheet; Citigroup did too. Enron bullied the government into weakening pesky regulations, browbeat the rating agencies that should have been protecting consumers, and in various ways

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