The name Enron has become shorthand for many things in the 10 years since the company went bankrupt, few of them positive.
The former Houston energy giant has become a synonym for corporate fraud, individual greed and executive hubris run amok. In many minds, the dozens of indictments, guilty pleas and guilty verdicts – covered exhaustively by the media – reinforce that perception.
But some of the players embroiled in the cases and their supporters are trying to take back the Enron legacy and challenge what has become the dominant narrative.
Ungagged.net, a website launched last year, features hours of videotaped interviews with former Enron employees, lawyers and academics who accuse the Department of Justice’s Enron Task Force of using strong-arm tactics to bully false confessions out of witnesses and win jury convictions.
Among the video interviews is David Bermingham, a former British banker who pleaded guilty to charges arising from a deal he and two others took part in with Andrew Fastow, who was Enron’s chief financial officer.
“That Enron itself was one big fraud is nonsense in my view, but it suits the Department of Justice, the politicians and the mainstream media to portray it that way,” Bermingham says.
Tom Hagemann, a prosecutor-turned-defense-attorney who represented a number of defendants tied to Enron, said the aggressiveness of the investigations was shocking.
“There was a climate of real fear in this community,” Hagemann said. “The task force was running roughshod over people, scaring them to death.”
Those accused in the Enron case even have a blog created by a self-described “Fangirl,” who goes by the pseudonym Cara Ellison, writing daily in their defense.
“The prosecutors had a narrative in mind and didn’t want to hear explanations,” Ellison said. “The media went along with it, no questions asked.”
Investigators admit there was pressure to bring charges.
But Mike Anderson, the FBI’s assistant special agent in charge of the white-collar crime group in Houston in 2001, said the pressure came from the community at large, not just from Justice Department brass.
“Any time you have thousands of people lose their jobs and the No. 7 company in the country fails so completely, there’s a huge cry for justice,” Anderson said. “And it’s not just from the FBI, but from everyone in this community and everyone that was a shareholder.”
But he says the tough stance investigators took didn’t cross the line.
“In a case of this magnitude, it’s important to be aggressive in the investigation, but, again, the case has to be based on facts,” Anderson said. “I can’t indict someone without presenting information to a grand jury. I’m satisfied with what we did.”
Setbacks down the line
While the list of guilty pleas and guilty verdicts is long, the appeals process cut into that record.
The jury verdict against accounting firm Arthur Andersen, Enron’s auditor, was thrown out by the U.S. Supreme Court due to a flaw in the instructions to jurors.
Prosecutors didn’t retry the case, but the firm was ruined.
The Supreme Court also threw out one of the legal theories used to convict former CEO Jeff Skilling, sending the it back for review to a lower court that upheld the convictions on other grounds.
But Skilling, serving a 24-year prison sentence, still may get that term reduced because of an appeals court finding that a Houston trial judge erred in applying sentencing guidelines.
Reversal a surprise
Sam Buell, one of the first members of the federal Enron Task Force, said the Arthur Andersen reversal was a surprise because the jury instructions didn’t seem to be in question. But he noted the court didn’t challenge the criminality of the conduct in the case.
Some prosecutors suspect the decision was the Supreme Court’s effort “to put a shot across the Justice Department’s bow over the extent to which a corporation can be held liable,” Buell said. “Whether that was the intent or not, it certainly has had that effect as we see by the reluctance to indict companies and the blooming of deferred prosecution agreements.”
Leslie Caldwell, the first director of the Enron Task Force, says she can understand the perspective that some cases might not have been criminal because they involved accounting in gray areas about which experts disagree.
“I don’t think that was the case with any of the Enron charges,” she said. “But others might disagree.”
Sometimes forgotten in the flurry of indictments and trials are the many thousands of Enron workers who were never accused, yet got black marks on their résumés.
Ten years later, former workers say employers and colleagues are more likely to appreciate the value of an ex-Enron worker’s experience.
Robert Bradley, a former speechwriter for the late Enron CEO Ken Lay who has been critical of his former boss’s work, said two Houston companies are illustrative of Enron’s true legacy: energy transport giant Kinder Morgan, run by former Enron president Rich Kinder, who left four years prior to the bankruptcy; and Centaurus Energy, the commodity hedge fund run by former top Enron trader John Arnold.
“You put them together, and you would get that new kind of energy major Enron was trying to be, based around natural gas infrastructure and commodity trading,” Bradley said.
Many were honest
Since the bankruptcy, Kinder has been reluctant to discuss Enron, but he did say that its former employees make up some of the industry’s best and brightest.
“What often gets overlooked when people talk about the tragic demise of Enron is that there were many honest, hard-working, good employees at Enron,” Kinder said. “Fortunately for the industry, many of these individuals, including some truly bright and outstanding performers, have gone on to excel with other energy companies in Houston and around the world.”