« Take a look at this job posting | Main | Jobs for Iraqis »
January 11, 2007
What's he building in there? Let's go look it up online
The BlueEyedGirl and I watched The Smartest Guys in the Room, a rather misleading and unhelpful look at the fall of Enron that everyone seemed to love but me. I read an awful lot about what happened in the Enron story, and I haven't found anything as insightful and lucid at Malcolm Gladwell's piece in The New Yorker, Open Secrets.
Enron's S.P.E.s were, by any measure, evidence of extraordinary recklessness and incompetence. But you can't blame Enron for covering up the existence of its side deals. It didn't; it disclosed them. The argument against the company, then, is more accurately that it didn't tell its investors enough about its S.P.E.s. But what is enough? Enron had some three thousand S.P.E.s, and the paperwork for each one probably ran in excess of a thousand pages. It scarcely would have helped investors if Enron had made all three million pages public. What about an edited version of each deal? Steven Schwarcz, a professor at Duke Law School, recently examined a random sample of twenty S.P.E. disclosure statements from various corporations--that is, summaries of the deals put together for interested parties--and found that on average they ran to forty single-spaced pages. So a summary of Enron's S.P.E.s would have come to a hundred and twenty thousand single-spaced pages. What about a summary of all those summaries? That's what the bankruptcy examiner in the Enron case put together, and it took up a thousand pages. Well, then, what about a summary of the summary of the summaries? That’s what the Powers Committee put together. The committee looked only at the "substance of the most significant transactions," and its accounting still ran to two hundred numbingly complicated pages and, as Schwarcz points out, that was "with the benefit of hindsight and with the assistance of some of the finest legal talent in the nation."
Posted by OneEyedMan at January 11, 2007 9:43 PM
Comments
Post a comment
Thanks for signing in, . Now you can comment. (sign out)
(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)