Here's how it would work: Enron's Washington intelligence traders would acquire the kind of information its Houston commodities and securities traders could use to stay a step ahead of the competition. What new regulations were in the works? What legislation was about to move? And, most importantly, how all this might affect the price of electricity, gas, or anything else Enron traded in?
HUBRIS AND DELUSIONS. The concept of lightning-quick information gathering never worked, however. Much of the information a lobbyist comes across is hard to quantify. And the trader's culture at Enron clearly stood out in buttoned-down D.C. "The whole thing was just really weird," says one former lobbyist. "I suppose it reflected where the company was going. But it was a flop."
The idea was just one of many from a company whose successes clearly were going to its head. After a decade that saw it become not only a Wall Street darling but also a force in D.C., the company began flaunting its clout and generating some highly unconventional ideas.
For example, Enron actually thought it could enact legislative changes by brow-beating its legislative friends. In 2000, it went to key Republican lawmakers insisting they pass legislation to preempt state regulation of electrical utilities with more lenient federal oversight. Keep in mind that the Republican Party is the modern-day standard-bearer for states-rights advocates. When a few GOPers balked, Enron's top brass pitched a fit. "They definitely wanted it their way, and they wanted it now," recalls Representative Joe Barton (R-Tex.). "This is a company that got too big for its britches."
ARROGANCE AND OUTRAGE. At one point, Barton and Enron CEO Jeffrey Skilling got into a shouting match in the congressman's office, Barton says. "I basically told him his position didn't have more than two or three votes," Barton says now. "He didn't like that and proceeded to tell me how I should run my subcommittee. We each got mad at each other and made it clear why we were mad."
Skilling could not be reached for his side of the story. But one thing is obvious from this public retelling. He managed to upset someone who should be a key ally. Barton chairs the House energy and power subcommittee and is -- or at least was -- about as sympathetic to Enron as a congressman can be. He's conservative, hails from Enron's home state, supports deregulation, and often champions legislation to help the energy industry.
In some ways Enron's derring-do is understandable. It's ability to expand beyond its original business as a natural-gas pipeline company can be attributed in part to successful lobbying. It never would have gotten into the wholesale electricity business without persuading Congress to change the law in 1992. It would have had a tougher time developing its far-flung trading operations had it not been able to fight off more regulatory oversight. Its CEO for more than two decades, Ken Lay, was and is a personal friend of both Presidents with the last name of Bush. And at the dawning of a new Administration, it counted several key advisers to President Bush among its former lobbyists and consultants.
A HELPLESS GIANT. Even so, the company's behavior at the peak of its power was clearly something to behold. In the 2000 election cycle, it pumped $2.4 million into the political system through contributions. In addition to its in-house lobbying team, it retained a who's who of powerful ex-politicos, including former Montana Governor Marc Racicot, former Secretary of State James Baker, former Chief of Staff to Bill Clinton Thomas F. "Mac" McLarty, and former Christian Coalition Director Ralph Reed.
Perhaps its ultimate act of hubris, however, came as the company was entering bankruptcy. In 2001, 255 publicly traded companies, once worth a combined quarter of a trillion dollars, filed for bankruptcy protection. Of these, a grand total of one -- Enron -- had the moxie to precede its filing with calls to the Commerce and Treasury Secretaries to suggest the company should be bailed out at taxpayer expense.
Apparently Lay, who, according to numerous published reports made the calls, was confusing his own plight with the nation's best interests. He's not commenting. But given Enron's opinion of how important the company was in the grand scheme of things, maybe Lay's phone calls last fall shouldn't come as a surprise. Carney covers legal affairs for BusinessWeek in the Washington bureau