texasmonthly.com: What was the biggest challenge in reporting this story?
Mimi Swartz: The biggest challenge was in deciding how much the average, non-Houstonian reader wanted to know about the Enron trial.
texasmonthly.com: How much a role did hubris play in the downfall of Kenneth Lay and Jeffrey Skilling?
MS: A great deal. Both men came to believe their own press clippings and couldn’t admit they were wrong when doing so might have saved the company in the earlier stages. On the other hand, the rules of Wall Street played just as big a role—once you loose your footing, and start to weaken, the market starts to pull away, and it’s hard to restore that confidence.
texasmonthly.com: What would you characterize as the central theme or lesson of the Enron verdict, if indeed it has one?
MS: That if something doesn’t make sense, you aren’t stupid—something’s going on. Fayez Sarofim didn’t invest in Enron because he couldn’t understand its balance sheets. That was all he needed to know to protect his clients from loss.
texasmonthly.com: As a member of the media, do you think that Enron should have been subjected to closer public scrutiny when evidence of the company’s troubles began to emerge?
MS: Yes. Lay and Skilling were great salesmen, but the journalists covering them for many years were all too willing to accept everything they said at face value.
texasmonthly.com: What was the most shocking or disturbing moment you experienced while covering the trial?
MS: Watching Ken Lay self destruct. Many people think he not only did himself in but also took Skilling down with him. No one expected Lay to be such a bad witness.
texasmonthly.com: You refer to national and international media coverage of the Enron trial as “The classic Texas nightmare—outsiders arriving and passing judgment on our intelligence— … made real.” To what extent did this nightmare play itself out? In your opinion, how accurately (or inaccurately) did the New York Times, the Wall Street Journal, and other publications portray the Enron saga?
MS: I think they portrayed the saga very well. It just wasn’t fun to watch. If you go back and read the Powers Report—the investigation completed by William Powers, then dean of the University of Texas School of Law, now president of UT—the facts never changed much from the first investigation done soon after the company’s collapse. As much as the company executives denied the truth, eventually, Powers was proven right.
texasmonthly.com: What do you think was more shocking to the public consciousness, the amount of money lost in the collapse, or the implosion of the idea of Enron as a leader, America’s most innovative company?
MS: Locally, what really shook people was how quickly the company imploded, and how much was lost in such a short time. Nationally, I think it was the latter—that a company that seemed so innovative and exciting was really just a sham.