The Best American Crime Writing (38 page)

By 1996, Avery had been transferred to Enron International and was therefore in the middle of the drama that would define the fall of Enron. It involved assets versus trading, and a rivalry between Rebecca Mark and Jeff Skilling, which led to the demise of Enron International, frequently referred to as “the purge.” The war was fought over “paper gas,” as the executives at Enron International called Skilling’s ruthless consolidation of his power on the trading side. Skilling’s traders occupied three floors in the Enron headquarters, and the trading room had more plasma screens than any other office in America. The atmosphere, according to one former Enron manager, was “the Royalton Hotel meets the Death Star.” At the height of Skilling’s power, the company was moving toward a peak moment, when the partnership structures would enable price-earnings ratios of 60, and the stock would surge in 2000 to $90.

Avery entered Enron International on the tax side and soon began working eighteen-hour days. She kept a picture in her office of Kay, now 11 with long blond hair, but when people asked her, “Who is that?,” Avery would reply only, “My daughter.” She rarely talked about her private life, but during the last weeks of each summer, as Kay got ready to return to her father, Avery was clearly under strain. Kay would lie in bed, crying, “Please let me stay.” By 1999, Avery was earning more than most vice presidents, almost $300,000 a year with her bonus. She was angry that Enron refused to give her the title, and was convinced that, at 49, she was a victim of ageism. She took on an onerous amount of work in order to blot out her anger over her custody problems. Exploring the foreign-tax implications for Enron dealmakers negotiating for pipelines and power plants in Brazil, Bolivia, Peru, Eastern Europe, and Africa, Avery had to learn the tax code for each country. By then “the Skilling atmosphere,”
as it is often called, had begun to permeate the department. Avery recalled, “We were told constantly, ‘Keep the debt off the balance sheets.’” This was done not only through off-the-books partnerships but also through loopholes in the tax laws of the foreign countries. Tax meetings would go on for hours, but Avery rarely complained.

Sent to Rio, she stayed for months in Copacabana, mastering the Brazilian tax code in order to facilitate negotiations for a pipeline between Brazil and Bolivia. She also began an affair with a member of the Enron team and for the first time in years felt it was possible to have an emotional life. She then went to Bolivia and Peru, spent weeks in Warsaw, returned to Houston, and flew to Africa, attempting to explain to Kay why it was often nine or ten hours later where she was calling from.

During this period, she was searching for lawyers in the counties around Eudora, Arkansas, hoping to find a talented attorney who would take on the Avery family. She knew she could not defend her travel schedule in a courtroom; she was on constant call, and, as she confided to her friends, the strain was becoming unbearable. How could she put an 11-year-old through the hell of an ugly custody battle?

In 1997 she was invited to the Enron International executive retreat in Beaver Creek, Colorado. At lunch during a ski break, she was joined at an outdoor table by Rebecca Mark, who was there with her 12-year-old twins. Mark was also divorced, and they talked about the constant emotional pull exerted on single working mothers. That day Avery resolved that she would try to become a deal originator in order to make more creative use of her time. At the bar, she sought out Mark’s co-CEO, Joseph Sutton, a former brigadier general who resembled Burt Lancaster. Taking power and American investments around the world had made Mark and Sutton
well-known in developing countries, but also, at times, the targets of scathing criticism for supporting the alleged imperial exploitation of local workers. In India they were accused of pushing through a $2 billion energy plant at Dabhol with bribes and threats, and of manhandling laborers. The Indian press is notorious for libel, and Enron officials vigorously denied the charges, which were never proved. Sutton was intrigued when Avery told him she had once set up her own pipeline marketing business, and he suggested that she write a letter to Mark.

I went to Houston determined to meet Rebecca Mark. For the last decade Mark had been a template of female achievement for the business press—named twice to
Fortunes
list of the 50 top women CEOs. Her style had become famous—the size 6 Armani skirts, the stiletto heels. As the head of Enron International, she had early on taken part, with John Wing, in negotiating the billion-dollar power plant in England called Teesside, and had structured the deals for the Indian facility at Dabhol and the Brazilian pipeline. She and Henry Kissinger dealt with the Chinese premier, Israeli prime minister Ariel Sharon took her calls, Indian taxi drivers in Delhi would ask Enron executives, “Do you know the famous Miss Mark?” Back in Houston, she would work the phone late into the night in her flannel pajamas as her twins complained, “Mother, get off the phone!” She was an absence in the Houston social firmament; her ambitions were global, at the greatest remove from the Houston Country Club. As with Jan Avery, her job was her life, and her attractiveness and her ability to draw crowds in such places as Brazil and Vietnam helped to establish Ken Lay’s political bona fides and extend the Enron brand.

The day I went to see her, her houseman was hanging Christmas boughs on the front gates of her mansion. Mark lives palatially behind a high wall in River Oaks. As I walked toward the house,
two large dogs came bounding up to me, followed by a tall blond with a distinct Texas-rich-girl look, a bouncing mane of hair, and the skintight pale-blue stonewashed jeans that Houston and Hollywood power women pair with a $1,000 blazer and a white Gap T-shirt. Estimates of Mark’s personal fortune vary wildly, from $30 million to $80 million. She married for the second time two years ago to Michael Jusbasche, who was born in Bolivia and owns a chemical company.

Like Ken Lay, Mark came from a small town in Missouri, one of four children in a farm family with deep fundamentalist beliefs. Her conversational style has been polished in Texas, and she is a master of “hillbillying,” the trick of playing up one’s humble origins. “Sometimes it was so cold in our farmhouse that frost was on the quilt,” Mark told me as we sat in her vast drawing room with a grand piano in it and looked out on the garden. Within Enron International, Mark presented herself with the same down-home attitude, along with a rapier-sharp skill in marshaling rigorous arguments for deals. She was a booster of talent, particularly in women, and she created an atmosphere that felt familial. She would throw Christmas parties for as many as nine hundred people at her house, with carolers, clowns, and rides for the children. As a CEO operating under terrible tension, she told me, she taught herself to conceal her anger behind a midwestern-sorority-girl smile, particularly as she felt the Enron culture turning increasingly ruthless. She had a trick: When other executives excoriated her in meetings for not producing enough profits, she would not fight back but would simply tell herself that she was the smartest person in the room. “I was looking at them but it wasn’t real,” she said. “It was like an out-of-body experience.”

At the time I met Mark, she was angry about an ongoing attack on her abilities in the business press. Moreover, she was bound by a confidentiality agreement and had been named as one of the twenty-nine
officials who are potential defendants in the class action cases against Enron. As she told me later, “I am prepared for two stories: the ‘I had sex with everyone in the universe’ story and ‘Rebecca’s assets stink.’ If they have a reason to try to destroy me, it will be over the quality of my business and what they will make up about my love life. The sole reason will be to put less credibility on the side of the asset business I built up.”

There appear to be few people in Houston who do not hold strong opinions about Mark’s investments. One economist who knows her well described her as “a bundle of energy … but she and John Wing figured out a way to take a juicy bite of the apple with their power plant development, and the credulous banks went along with them … loaning 95 percent financing on the basis of pro formas that no fool would believe …. The poor Indian and Chinese residential electricity consumers would have been spending half their disposable annual income on electricity.” A prominent money manager who shorted Enron stock in 2000 said, “Almost everything that Mark touched at Enron was catastrophic in terms of investment return. The company had to either recognize the losses or cover them up. To Skilling’s detriment, he chose to cover them up.” When I asked Mark about this, she said, “None of the money managers have ever read the contracts backing up these businesses. The companies we created around the world are not bankrupt.”

Some insiders theorized that Mark’s “special relationship” with Ken Lay may have given her carte blanche to operate with no checks and balances. It was commonly thought that Rebecca Mark and Jeff Skilling had had an affair; they were both divorced, had children the same ages, and often went to school sporting events together. Mark’s detractors suggest that she also had relationships with several members of her development team. Mark has become used to hearing this type of sexual branding, and believes it is a classic attempt to diminish her tenacity and achievement. “These were
people outside the international arena who did not know how we worked,” she said. “I used to make jokes about this in speeches and say, ‘I had no idea I was so staggeringly attractive.’ And how in the world would I ever have time, when I have passports so thick they look like volumes of the Bible.”

For years, Mark operated under the protection of Ken Lay and Rich Kinder. She represented the assets-based side of Enron, which went back to the early days of the company, when Lay realized that gas could be traded as a commodity. By then the government had forced the utilities to accept the notion of unregulated power. Mark’s great skill as a CEO was always in presentation, her colleagues say, not in operation, which was routinely handled by other executives. Mark was able to persuade the Indian government to change its policies and reverse its course on the power plant at Dabhol, and she negotiated ironclad agreements protecting the assets in the event the government should change. She understood that her ability to survive at the highest level required her to project certitude, a sense that she was comfortable in her own skin.

In the early days of Enron International, Mark was told repeatedly, “You eat what you kill,” and initially she and her team worked without bonuses. However, she was able to come up with a lucrative contract-value-percentage arrangement that ultimately earned her close to $80 million in stock options and reportedly enraged Jeff Skilling. “I think they gave us this deal because they were convinced we couldn’t get anything done,” she said. She and Joe Sutton operated on sheer nerve. Sutton would tell her, “Act like we’ve already won,” as they went into meetings with foreign leaders.

A former executive at Shell Oil described Mark in Bolivia, determined to sell the government on the idea of giving Enron the contract to assist in building a billion-dollar pipeline between Brazil and Bolivia, a project so politically problematic that even industry
leaders such as Shell and Mobil wouldn’t touch it. Mark sailed into one presentation and spoke for hours without notes to three hundred officials, dazzling them with her command of the area’s problems and stimulating them with her assurances of what Enron could bring to the table. She was less successful in dealing with complexities in the Middle East. The Enron team arrived in Qatar to set up a three-country development deal for the richest supply of natural gas in the world. “No one tells us how to negotiate—we are Enron,” Mark allegedly said to one diplomat representing the emir. Moreover, the Enron bids were couched in very aggressive language. “They told us they were doing us a public relations favor, letting our negotiation be a model for good relations with Israel,” the diplomat said, startled at the team’s lack of understanding of the region. In fact, Mark later told me, she had inherited this deal from another division of the company and found herself locked in a negotiating struggle with two governments. “We walked into a mess, and the Qataris were angry,” she said. “But we felt we could not leave a billion dollars on the ground.” Two years later the emir was said to be offended by the low price Enron bid for the gas. Ken Lay tried to smooth out the difficulties and renegotiate. “Not if you send in the same group,” the emir said sternly, according to an official who was in the room.

In 1998, Jan Avery was in Nicaragua as a project developer, supervising the building of a $75 million barge power plant, one of Enron International’s last enterprises. The night before the final approvals, she was on a conference call with Skilling’s aide Rick Buy and the Enron International executive who was presenting the Nicaraguan barge plant to the board. “They were screaming at each other,” Avery recalled. “It was clear how Skilling and his group were out to put a stop to all assets being developed. They were trying to make us lower the assessments, although the numbers had already been presented.”
By then Skilling had turned against Mark, telling her in meetings, according to one of her associates, that her assets were a disaster, the worst investments Enron had ever made.

Nine months after Avery moved to Managua, she developed a persistent cough. The working conditions were filthy, she recalled, and the air was full of smoke and pollution. The barge project had caused a political firestorm. The president of Nicaragua was demanding a payment of $2 million to allow the company to finish the work, and a warrant was put out by the Nicaraguan government for the arrest of Enron executives. “You have a spot on your lung,” her doctor told her. ‘You have to go home immediately.” In Houston she was diagnosed with a rare bacterial disease. She spent the next five months in the hospital, and several times her blood pressure climbed so high that she was close to death.

At the top of Enron International, the pressure on Rebecca Mark was increasing. She confided to friends that Skilling’s approach was like Chinese water torture, a subtle, continual bombardment of what she was doing. He was attempting to consolidate his power, moving Enron into a future where it was asset-light, as he said. He was still an icon of the business magazines, celebrated for his Gas Bank innovation, which moved Enron into a new world where it created a market in gas. His elliptical phrases, such as “vertical integration,” became koans of the dot-com era. One day Mark sat him down and asked him how his business worked. She was curious, she told colleagues, about broadband and the emerging energy markets. “I wanted a sense of comparison,” she said. “Are we that bad? Or are they that good?” Mark was operating in a closed system. Enron International had separate accounting and was in a different building. At the height of this internal war, Rich Kinder, who for years had kept a brake on the company’s exponential expansion, was passed over for CEO. Later, Ken Lay reportedly ran into Rich
Kinder’s wife and told her that none of Enron’s problems would have happened if Kinder were still at the company. After Kinder left Enron, he started a new energy company, Kinder Morgan, which is traded publicly; he is said to be a billionaire.