24 DAYS How Two Wall Street Journal Reporters Uncovered the Lies that Destroyed Faith in Corporate America By Rebecca Smith and John R. Emshwiller; HarperBusiness; 400pp; $25.95
In the two years since Enron Corp.'s implosion, several authors have tried to dissect the company's complex financial maneuvers and corrupt culture. Now, some of business journalism's heavy hitters have joined the fray with their own books on the scandal -- and the results are uneven.
Two teams of authors, Bethany McLean and Peter Elkind of Fortune and Rebecca Smith and John R. Emshwiller of The Wall Street Journal, have taken very different approaches to the now-familiar tale. In The Smartest Guys in the Room, McLean and Elkind build their story around the complex cast of characters who destroyed Enron. True, that has been done in other Enron books, but not with the clarity and voluminous detail that make this the best book about the Enron debacle to date. In 24 Days, Smith and Emshwiller construct the story around themselves and their dogged efforts to uncover the secretive partnerships run by Enron Chief Financial Officer Andrew S. Fastow. The result is a sometimes awkwardly self-conscious look at the way journalists work, which will likely prove more interesting to other reporters and public-relations spinmeisters than to the general public.
Based on hundreds of interviews and fresh details from personal calendars, performance reviews, e-mails, and other documents, McLean and Elkind masterfully weave together the many strands of the Enron story. They shine in their characterizations of Enron's often incompetent executives and in their understanding of the ruthless internal politics that contributed to the company's many business and personnel mistakes. They provide keen insight into the company's powerful traders and how their brutal culture infected the rest of the company. "Though [Chief Executive Officer Jeffrey K.] Skilling was their boss, he seemed intimidated by them. They were like a powerful high school clique that terrorizes even the principal," the authors write. Yet their sprawling narrative should make it clear once and for all that Enron's demise can't be blamed solely on Fastow and his small band of greedy finance executives. The authors show how, time and time again, Skilling and Chairman Kenneth L. Lay refused to "rein in the excesses."
The authors are equally adept at explaining Enron's accounting sleight-of-hand, including the "prepays" that obscure the company's true cash flow and the Byzantine "special purpose entities" created by Fastow and his cronies to mask Enron's deteriorating finances. The long-running investigations by the Justice Dept., the bankruptcy court examiner, and others have also produced a raft of data that the authors skillfully sort and summarize to dramatic effect. If there's a weakness in the book, it's a heavy reliance on unnamed sources -- the authors say that was necessary because of the fear many had about the ongoing probes and lawsuits -- and the lack of attribution at times for information that doesn't seem to have come from the reporters' own notebooks. But that's a small complaint for such a successful effort.
In 24 Days, Smith and Emshwiller, who won the 2002 Gerald Loeb Award for their coverage, break little new ground in exposing Enron's deceptions. Instead, readers get a microscopic view of the reporters' work.
The 24 days of the title represent the time that elapsed between Enron's disastrous quarterly loss, announced on Oct. 16, 2001, and the Nov. 8 restatement of its financial results after a string of scathing Journal stories. But the authors really begin their tale in August, 2001, with the resignation of CEO Skilling after about six months on the job. That sets off alarm bells and puts energy reporter Smith and her Los Angeles colleague Emshwiller on the trail.
Like most journalists (not to mention analysts and credit-rating agencies) covering Enron, Smith is initially clueless about the depth of its problems, even after two years of following the company. It is white-collar-crime reporter Emshwiller who first notices a peculiar reference in Enron's financial filings to an unnamed "senior officer" run-ning partnerships that do business with Enron. But only as a result of persistent digging -- assisted by savvy tipsters who offer inside documents -- do the reporters ultimately learn the details of Fastow's self-dealing.
While the story moves along briskly, the authors seem uncomfortable writing about themselves, and the result is some clunky, third-person prose. Still, the inside tidbits, from reporters' turf wars to editors' badgering, will strike other journalists as amusingly familiar. For Enron junkies and business reporters, this is on the must-read list, too. By Wendy Zellner