Conspiracy of Fools (19 page)

This guy is just not with it
. “Well, I think you’ve gotta be honest and tell them that we’ve got work to do.”

Fastow glanced out the window. “Yeah. Sure. Okay.”

Again silence. Fastow seemed to have had the stuffing knocked out of him. He rubbed his fingertips across his eyes. “I’m a failure, I guess. Maybe I should have just stayed in finance. Maybe …” His words trailed off.

He looked away from the window, into Bowen’s eyes.

“I don’t know what I’m going to do,” Fastow said. “I’m going to lose my job. My meeting with him next week might be my last meeting at Enron.”

He fidgeted nervously. “Ray, I’m really sorry for bringing you here,” he said. “I know you’ve got every reason to hate me. But please don’t be pissed. You’re a smart guy, you’ll do fine. But I’m not sure if I’m going to be here anymore if this doesn’t go well next week.”

Bowen stared down at his boss. Until that moment, he would never have thought that he could pity Andy Fastow.

———

The days inched toward the deadline. The retail team worked through the week, but there was no repeat of the last feverish rush. They had done their best the week before. There were no miracles, no secret strategies hidden in desk drawers. There was, instead, a silent sense of futility, a recognition that, somehow, changes were coming.

The appointed day arrived, but the mood in the retail division was very different this time. There was no anticipation, no excitement. Few even noticed when Fastow slipped away, heading upstairs for what he was convinced would be his professional execution.

“Hey, Andy, how’s it going?” Skilling said gently when Fastow arrived. “So what have you got for me?”

No rancor, no anger. Skilling’s tone was softer than last time. Again Fastow handed him his report and sat at the conference table. Skilling thumbed through it for about ten seconds. Again boxes and numbers. The information he needed just wasn’t in there. He closed it up.

“All right, Jeff,” Fastow began. “I think—”

“Andy,” Skilling interrupted. “I just don’t think this is working.”

Fastow stiffened, bracing for the blow. “Okay.”

“You’re just not giving me what I need to know to make the decision to commit the capital and people to this business,” Skilling continued. “I’m just not comfortable with this being the game plan for a whole new business.”

“Jeff, it’s not like I haven’t tried. I’ve tried. I just don’t know what it is that you want.”

Skilling could see Fastow was on edge. The message had been delivered. Maybe it was time to smooth things over.

“Andy, I don’t know if it’s what you’re doing or if it’s what I’m asking for. But this isn’t what I need.”

“Yeah, I can tell it’s not clicking for you.”

“Well,” Skilling said, “I just don’t think this is going to work out.” Fastow nodded, his shoulders sagging.

“We don’t need to decide anything right now,” Skilling continued. “Let’s get together tomorrow and talk about it some more.” The two men set a time, and Fastow left the room.

When Fastow arrived the next day, Skilling was engaged in an animated phone conversation. He saw Fastow outside the door and raised his index finger. Fastow stayed almost motionless in the hallway, occasionally glancing down at his feet, until Skilling hung up and waved him in. “Hey, man, how’s it going?” Skilling said, standing.

Fastow shrugged. “Well, obviously, not too good,” he said, dropping into one of the conference table chairs.

For a moment Skilling studied his young colleague. Shoulders slumped, hangdog face. Like a kid who had failed a school test and was now going to talk to Dad about it.

Skilling spread open his hands. “Hey, Andy, everything is fine. I love you. I have no problems here. This obviously just isn’t the right thing. Hey, maybe it’s me. Maybe we just weren’t on the same wavelength.”

No reaction. “Look, man,” Skilling continued, “I’d really like you to go back and do what you were doing before in the finance group, ’cause you’re great at it.”

It was as if a weight was lifted from Fastow’s shoulders. “You mean I can have my old job back?” he asked. “Yeah, if you want it, sure. I mean, you’re the best in the world at what you do.”

A wisp of a smile creased Fastow’s face. “Okay, yeah,” he said eagerly. “I would like my old job back.”

“Fine,” Skilling replied. “Done.”

All that was left to do, Skilling said, was for Fastow to write up a memo, explaining that he had decided to go back to finance. Somebody else would be needed to run retail, Skilling said, probably Lou Pai from over at gas trading.

The meeting ended, and Fastow stammered out his thanks as he left the room. Skilling felt pretty good. Gave the guy a chance, didn’t work, pulled him out. No harm, no foul.

Fastow arrived back at retail a few minutes later and walked over to Bowen’s desk.

“I’m out of here,” he announced. “Back to finance.” Stunned, Bowen sat in his chair. “And what do I do?”

“I think they’ll want you to stay and hold this place together. Lou Pai’s coming down and taking over.”

For a moment, Fastow eyed Bowen. Then he turned away. “See you later,” he said.

News of Fastow’s failure shot through the Enron building in a matter of hours. His enemies relished the moment, delighted to know that they had something to hold over his head for months—maybe years—to come. But a small band of sympathizers worried that his public humiliation would drive him from the company.

Shortly after his meeting with Skilling, one of his friends, Amanda Martin, bumped into Fastow in a hallway. She could see he was hurting. She touched his shoulder.

“Andy, are you all right?”

“Yeah, I’m fine.”

“What are you going to do?”

“I’m in the process of figuring that out”

His initial relief had given way to the knowledge that he had just suffered a spectacular public failure.

“What does Jeff say?” Martin asked.

“He said I should go back to finance, because that’s where I was good.” Fastow shrugged. “He says he’s going to be supportive and that he doesn’t want me to leave.”

“Okay. Well, that’s good.”

“But I don’t know. He just fired my ass out of retail. So I’m considering my options, maybe other opportunities.”

Martin could hear the anger in his barely veiled threat to bolt Enron. “I hope it doesn’t come to that, Andy,” she said. “I hope you stay.”

Fastow said nothing. He continued on his way.

In reality, Fastow had narrowed his options considerably, and leaving Enron wasn’t one of them. Quitting was defeat. It would only add to the disgrace. He knew there was something better.

Fastow had reached a resolve; he would claw his way back to the top. He wasn’t going to let one fumble stop him from driving to the goal line—fulfilling his ambition for the wealth and influence commercial executives commanded. His path was clear. If he couldn’t go to the commercial side, the commercial side would come to him.

Finance had always been considered a support function, raising the capital that fed commercial businesses. But then the commercial guys pulled in the profits and the glory—benefits that would never have happened without the behind-the-scenes work of the finance group.

But Skilling was always pushing everyone, even the support functions, to think creatively. Why should finance be merely “a cost of doing business”? Sure, capital had costs attached, but saving on such expenses meant profits. And what about Fastow’s deals, like Cactus and JEDI? Those had translated into earnings, attributed to the commercial division. Why couldn’t that be assigned to finance? Why couldn’t finance be a
profit
center? And wouldn’t that give Fastow everything he had wanted from retail?

With Skilling’s backing, all Fastow needed was information about deals
going on at Enron where finance could play a role, where finance could make a profit. Then he could be back on top.

The plan was simple. Execution was the hard part.

The same week he left retail, Fastow began scouting out Enron’s managing directors. Office after office, the message was the same: he was there to help—with deals, with meeting their budgeted profits. They just had to let him know what they were doing; he’d take it from there.

But deal makers by their very nature are a cautious bunch. Bragging rights for transactions were hoarded at Enron because they translated into bonuses. If Fastow wanted to help, that could only mean that he was trying to snag credit. Everyone listened to the pitch politely—and then ignored him. Fastow needed to try another tack.

Later that week he was roaming the hallway in the finance division. He noticed Shirley Hudler, a young executive who helped with JEDI, sitting alone in Sherron Smith’s office. Fastow knew Hudler as the sort who charmed people easily, a down-home Texas type. She was tight with some executives in the North American units. She was close with his buddy Michael Kopper. She might be perfect to help out. Fastow stuck his head in the door.

“Hey,” he said cheerfully. “How’s it going?”

Hudler looked up from her work. “Hey, Andy. Pretty well, how about you?”

He stepped into the room. For a minute he tossed out a few questions about her work. “So,” he asked, “are you busy?”

“Yeah, but I could be busier,” she replied, regretting the words as soon as they came out of her mouth.

“Well,” Fastow replied, “we’ll see if we can do something about that.”

Fastow moved on. Not long after, he telephoned Hudler and asked her to come to his office. She hurried down.

“You know,” he said from behind his desk, “now that I’m back, I’m thinking about getting somebody to work for me, sort of as a chief of staff”

Hudler listened. This didn’t sound good.

“Somebody to run down deals for me,” he continued. “Meet with people, figure out their transactions, and come back to communicate the structures to me.”

It sounded worse.
Boy, this is going to be a dead end. Where does somebody go after a job like that?

“And I don’t just mean in this department,” Fastow said. “Wherever there are deals going on, I’d want somebody to run down the information.”

He leaned on his elbows. “What do you think?”

Hudler forced a smile. “Sounds interesting, Andy. I think I see what you want. And I think I’d be good at it.”

For a few minutes she asked questions, doing her best impression of someone who was interested; she was too far down on the department totem pole to brush him off. Finally she stood, murmured a few cheery words about the opportunity, and left. Fastow promised to get back to her.

Hudler headed back down the hallway.
I’m not doing that job
, she thought. She tracked down her boss, Sherron Smith, and told her about Fastow’s proposal.

Smith’s reply was direct. “Wow, that sucks.”

“Sherron, you’ve got to get me out of this. I can’t tell Andy no. I’m doomed if I do that”

Smith told Hudler she would take care of it. Fastow had made the offer because he thought she was short of things to do. Well, then, Smith said, she’d load Hudler up with assignments and tell Fastow she couldn’t afford to lose her. That would solve everything.

Fastow never got his secret office spy. In the end, it didn’t matter. He got what he wanted another way.

Shafts of sunlight filtered through the windows in Ken Rice’s office, illuminating the pennant behind his head from the University of Nebraska, his alma mater. Rice was leaning back in his chair, his feet propped up on the desk as he squeezed a blue stress ball. On one side of the room, Amanda Martin sat in a chair with her back to a glass wall while Cliff Baxter paced the floor in agitation.

They were known as the Three Musketeers, friends who gossiped endlessly about office goings-on. Their friendship seemed solid, but strains were developing. Rice and Martin had recently begun a romantic affair, keeping Baxter in the dark about it. The deception had injected tension into their dealings, requiring some playacting among three colleagues who supposedly told one another everything.

But today anger had displaced unease. A meeting of Enron’s top managers was coming up and, as usual, word had been purposely leaked out about the agenda to make sure any vehement objections could be aired ahead of time, behind closed doors. Rumor had it that Fastow had persuaded Skilling to designate finance as a profit center and that the announcement would come at the next meeting.

The three friends found the concept ludicrous. Finance was a support function, not a business.

“This is just bullshit,” Rice said, tossing the stress ball, and then catching it. “It makes no sense.”

Baxter, his suit jacket unbuttoned, waved his hands in the air. “This is so fucking out of control!”

“Why is Skilling doing it?” Rice asked.

Baxter turned on his heel, pacing toward the back wall. “Fastow is such a little shit,” he growled.

“He’s just trying to make up for blowing it in retail,” Rice said.

Baxter snapped around. Fastow’s original elevation had long been a sore point with him. “Retail! Retail! What the fuck was that? What the fuck was Skilling thinking? You can’t just take a guy out of finance and have him run a business! He’s a goddamn banker! He doesn’t know shit about running a business! What the fuck was he doing there?”

Martin jumped in. “Already half of my day is spent fighting with our traders over prices they want us to pay for commodities. They’re gaming the system, they’re jacking up the prices, but I have to use them.”

She shook her head. “So now I’ve got to contend with finance charging us extra on our interest rates so that they can make some more profit?” she said. “All so we can charge each other for doing Enron business! Rather than meeting with customers or structuring deals, I’m just going to be fighting all the time.”

Something had to be done, the three agreed. Someone had to tell Skilling that this idea was foolish. Baxter, the most mercurial of the bunch, would approach first, pounding him with his outrage. Rice would handle the follow-up, calmly reinforcing Baxter’s objections.

They gave it their best shot, but the final proposal was different only in the details. Finance would still be a profit center, but its earnings would be reallocated to the various commercial divisions for the purpose of calculating bonuses. If finance actually brought earnings to the table—as opposed to just jacking up prices to the commercial division—the results could net out to everyone’s benefit.