The sudden collapse of Enron, culminating in what was then the largest bankruptcy filing in U.S. history on Dec. 2, 2001, changed thousands of lives, damaged investor confidence to the core and made household names out of previously obscure businesspeople.
Many were brought before congressional committees to be raped and subjected to endless hearings. Many were eventually indicted, held and marched before cameras handcuffed as part of the national catharsis. Twenty years after the Enron trial, the last Enron suspects were released from prison and paid their restitution. They now want to continue their lives.
Even today, only a few people who we interviewed for the article are willing to talk publicly about their experiences at Enron. A majority of the people we spoke to said there was no upside in dissociating from Enron. They prefer keeping a low profile. Many said the memories are still very personal, even after 20 years. One former executive said he would need time to “decompress” after an hour-and-20-minute phone conversation about Enron — most conversations with Enron alumni are long.
CNBC talked to former CEOs of Enron. Many of them still fondly remember the time they spent at Enron.
Kenneth Lay (C), former Enron Chairman, leaves Bob Casey U.S. Courthouse following the trial of Kenneth Lay (C) in fraud and conspiracy, Houston, Texas.
Dave Einsel | Getty Images
Kenneth Lay was Enron’s founder and chairman. He did not make it through the scandal. Not long before Enron’s collapse, he was riding high — a local hero in Houston who had been rumored to be in line for a post in the new George W. Bush administration. Lay, who was nicknamed Kenny Boy by Bush II as Kenny Boy, had strong ties with the Bush family.
Convicted on 10 felony counts in 2006 — a verdict that he said at the time left him “shocked” — Lay died of a heart attack six weeks later while awaiting sentencing. The court vacated his convictions because he did not have the opportunity to appeal.
Lay’s daughter Elizabeth (an attorney) and son Mark (an ex-Enron vice president, who is still working in the energy business), recalled their conversations. multiple firsts at EnronUnder their father’s guidance, they worked in the areas of renewable energy, environment stewardship and support for minorities or disadvantaged persons.
They stated that the model was as simple as hiring the most intelligent people possible, giving them capital, and managing the back office so they could create new markets.
Jeffrey Skilling, former CEO Enron, testifies before Senate Committee on Commerce, Science and Transportation on Tuesday, February 26th, 2002 on Capitol Hill, Washington, DC.
Getty Images| AFP | Getty Images
Jeffrey Skilling was the former CEO of Enron. He is a McKinsey consulting veteran who created Enron’s “asset-light” business model that focuses on market-making companies like natural gas trading and not traditional pipelines. completed a 12-year prison term in 2019. After just six months of being CEO, his abrupt resignation in 2001 was the catalyst for some initial suspicions regarding problems at Enron.
Skilling declined to comment. Skilling was convicted on 19 counts, including insider trading, fraud conspiracy, and conspiracy. He was adamant that he is innocent, and he had his appeals dropped in 2013, as part of an arrangement with the Justice Department which led to Skilling’s early release.
He had been sentenced initially to 24 years. However, a federal appels court found that the sentence was too harsh and sent it back to the judge to be resentenced. Skilling and DOJ jointly recommended a sentence of 14 years in return for Skilling’s dropping all remaining appeals. Skilling was freed after 12 years of good conduct.
Skilling, who is now back in Houston working for Veld Applied Analytics is a start up firm within the energy sector. Its. websiteThe company has been working on “sophisticated analytical instruments to assess and track the valuation of natural gas and oil assets.”
Richard Causey was the ex-chief accounting officer and was due to stand trial along with Lay and Skilling. However, he pleaded guilty only weeks prior to the trial. He spent nearly five years behind bars and was freed in 2011. He is currently back in Houston where he runs a financial consulting firm. Causey did not comment.
Andy Fastow (ex-chief financial officer) is one of few Enron former executives who was willing to share his experiences. Fastow, who created some of Enron’s most notorious off-balance-sheet transactionsHe was able to make millions, and eventually pleaded guilty for two fraud charges. Skilling and Lay were his star witnesses, and he served five years imprisonment.
Although he declined interview, he did give a statement about the Enron bankruptcy 20 years ago.
“I am convinced that the actions I took were wrong and unethical. It was also illegal. I am fully responsible for all of my actions. Each day I’m embarrassed and ashamed. I am deeply sorry for any harm caused by my actions. Although I do not expect you to accept my apology,” he said.
Andy Fastow, former chief financial officer of Enron, is taken by U.S. Marshals from Houston Federal Courthouse, Texas, after he has completed his fourth day’s testimony in support of the government during the fraud and conspiracy trial against Jeff Skilling, Ken Lay, Monday, March 13, 2006.
F. Carter Smith | Bloomberg | Getty Images
Fastow was released from prison in 2011. He has been on the lecture circuit since then, giving talks unpaid to college students, fraud investigators, business groups and other individuals. He often holds his Federal Bureau of Prisons card with one hand, and the trophy for “CFO of Year” he was awarded in the opposite. He said that even though executives and companies may think they follow the rules, it could be they still breaking them like he did. Fastow claims that misleading deals such as those he used at Enron remain commonplace in the business world and are often celebrated.
You can be following all of the rules but still be guilty fraud. Fastow stated in an interview that this should be very troubling for everyone. excerpt from one of his speechesOnline posting by BigSpeak Speakers BureauThe going rate to deliver a Fastow speech in this area is $10,001-20,000.
Sherron Watkins, Enron’s Vice-President of Corporate Development (L), observes Jeffrey Skilling (R), former President and CEO Enron Corporation testifying before the Senate Committee on Commerce Science and Transportation on Tuesday 26 February 2002 in Washington DC.
Getty Images| Getty Images
A former Enron executive, who turned her expertise into a consulting and speaking career, said Fastow doesn’t seem to get it from the things she saw.
Sherron Watkins, ex-Enron vice president and former CFO of the Year, said that the award was the same information for investors and employees. However, the Department of Justice could subpoena the Department of Justice to get the source of the transaction. So, it’s an error. His message is conflicting because it focuses on principles and not specific rules. He seems to be a victim of the accounting rules and ambiguity.
Watkins once reported to Fastow. She brought up her concerns regarding Enron’s accounting shortly after Skilling’s resignation. Her memo to Lay, which she sent out during the congressional investigation became widely known and was dubbed the Enron whistleblower.
Watkins was a witness in Congress in 2006 and at the Skilling and Lay trial. She became a speaker as well as a consultant to corporations, though she claimed that the consulting business never took off.
I think that companies will be fine listening to my story and only need one-way communication. She said that she has never been employed for two-way communications. “I make them feel uncomfortable, for whatever reason.”
She still delivers speeches today, and she continues to teach, as an educator. executive in residence at Texas State University.
She said that ethics should be learned like an accounting skill, in which you are really dealing with all of the possible dilemmas.
Watkins has been described as whistleblower but she didn’t take her concerns to the outside world. According to Watkins, this is due to the lack of an employee mechanism in 2001. She is proud of the protections available to corporate whistleblowers now, which include the robust Securities and Exchange Commission. Office of the WhistleblowerDeveloped following 2008’s financial crisis.
She said that the company has already paid out more than a billion dollars in rewards over its 10 year existence.
Leslie R. Caldwell, U.S. Assistant Attorney and Enron Chief Prosecutor, speaks to the media in Houston on October 16, 2002.
George Wong | Getty Images News | Getty Images
Although the top Enron executives are still relatively unknown over the last 20 years, many of those who were part of the investigation team saw their careers rise.
After Enron’s demise, the George W. Bush administration established an Enron Task Force. This was to conduct investigations into the company.
Leslie Caldwell became the first director of this task force after she had been a successful prosecutor for organized criminality in Brooklyn.
Caldwell was the one who indicted Skilling and Fastow. She also secured Fastow’s pivotal guilty plea. Caldwell would then go on to lead the Justice Department’s criminal division under the Obama administration. Today, she heads the white-collar defense practice as a partner at Latham & Watkins in San Francisco.
Caldwell stated that she was proud of the work done by the task force and said it has had a long-lasting impact on corporate accountability.
It led to cultural changes in many companies across the country. She said compliance, once something that was largely ignored by the public, has become a major function of many companies. It’s also sent out a strong message regarding corruption within leadership ranks, and why it should be avoided.
Andrew Weissmann was her successor as Enron Task Force chief. He would then go on and become the top prosecutor for Robert Mueller, former FBI Director, in his investigation into Russian interference during the 2016 presidential election. He is currently a law analyst at NBC News and a member of the New York University faculty.
Sean Berkowitz was appointed Weissmann’s successor as director. Berkowitz was also the leading prosecutor for the Skilling and Lay trials. Now the global chair of the complex commercial litigation practice at Latham & Watkins in Chicago, he has represented high-profile white-collar defendants including “Full House” actress Lori LoughlinThe Operation Varsity BluesCollege admission scandal
Kathryn Ruemmler would become White House counsel during the Obama presidency as a deputy director of this task force. Today she serves as general counsel to the Obama administration. Goldman Sachs.
Disclosure: Comcast owns both NBC News (and CNBC) and is their parent company.