Word: fastow
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...Fastow was called to explain himself in front of a seething congressional committee probing Enron's failure last week. But he declined to testify, citing his Fifth Amendment right against self-incrimination. Says his spokesman, Gordon Andrew: "Our position remains that Mr. Fastow acted with the full knowledge and approval of Enron's board of directors, its office of the chairman, which included Mr. Lay and Mr. Skilling, and its internal and external auditors and legal advisers." His former boss, Jeffrey Skilling, who quit as Enron CEO last August, had no such hesitation, insisting to his incredulous interrogators that things...
...tale of Andy Fastow's rise from a plodding loan consolidator to financial genius at one of the country's coolest companies wasn't what it appeared to be. Then again, neither was Enron. "Fastow could talk the talk, but there's pretty clear evidence now he couldn't walk the walk," says an Enron insider. Fastow and his team "were all caught up in the facade of greatness...
...company's fat days, Fastow earned a reputation as a money wizard who constructed the complex financial vehicles that Enron drove on the road to explosive growth. Skilling wanted an "asset-light" company that could rapidly exploit deregulating markets for energy, water, broadband capacity and anything else that could be traded. So beginning in 1993, Fastow created hundreds of "special-purpose entities" designed to transfer Enron's debt to an outside company and get it off the books--without giving up control of the assets that stood behind the debt...
...challenge for Enron was to enter the burgeoning deregulated energy markets without sacrificing its credit rating by carrying too much debt on the books. So Fastow got creative. He tripled his staff, to more than 100, hiring various banking experts and giving them the task of selling and buying capital risk. "They were all young kids, 28 to 32, with great pedigrees, and they started coming up with these fancy derivatives," says Houston lawyer Tom Bilek, who interviewed dozens of former Fastow associates before suing Enron's management. "But Fastow was the boy genius setting all these SPEs...
...people who sat across the negotiating table from Fastow as he pitched Enron's deals, and the people who worked with him, were never as impressed with him as they were with his boss and mentor, Skilling. It was Skilling who provided the strategic vision behind Enron, who transformed its old gas-pipeline culture into a swaggering, rule-breaking, dealmaking cult that ultimately mislaid its analytical skills and perhaps its moral compass. Skilling, a Harvard M.B.A. and former McKinsey & Co. consultant, had a high-wattage intellect that always impressed. Even when he was a student, people who met him knew...