The drama of the Enron scandal was playing out in the day-to-day headlines of a decade ago this month.
It was on October 16, 2001, in particular, that Enron issued a dramatic series of announcements. It had a 3d quarter loss of $618 million. It took a $1.2 billion hit against shareholder equity related to the unwinding of a partnership that its Chief Financial Officer, Andrew Fastow, had been running on the side (LJM2). And it acknowledged an after-tax charge against earnings of $544 million ... again, related to LJM2.
On October 17th, the SEC sent Enron a letter. Actually, three letters and three question marks: "WTF???"
On October 22, the existence of an SEC investigation became public knowledge and the price of shares of Enron fell 20 percent.
On October 24, the board finally fired Fastow, replacing him with Jeffrey McMahon, who himself had been deeply involved with many of the very Fastowian transactions that were doing in the company.
By October 29th it was obvious that Moodys was going to downgrade the company's credit status. Ken Lay talked on the phone on that day with President Bush's Commerce Secretary, Donald Evans. Nobody in the administration lifted a finger for Enron -- and I am nobody's idea of a Bushie, but I have to say this was to their credit.
Anyway, all of that provided excitement to the October of 2001. In this October we deal with different crises and the characters as they unfold have different names. Yet "the more things change...."
Knowledge is warranted belief -- it is the body of belief that we build up because, while living in this world, we've developed good reasons for believing it. What we know, then, is what works -- and it is, necessarily, what has worked for us, each of us individually, as a first approximation. For my other blog, on the struggles for control in the corporate suites, see www.proxypartisans.blogspot.com.
Knowledge is warranted belief -- it is the body of belief that we build up because, while living in this world, we've developed good reasons for believing it. What we know, then, is what works -- and it is, necessarily, what has worked for us, each of us individually, as a first approximation. For my other blog, on the struggles for control in the corporate suites, see www.proxypartisans.blogspot.com.
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