This NY Sunday Times article provides the first excerpt from Kurt Eichenwald‘s new book about the collapse of Enron Corp. — Conspiracy of Fools — that was the subject of this earlier post.
The entire excerpt is well worth reading, but the following part of the excerpt is particularly interesting. It involves an Enron management crisis meeting in late October 2001 as public revelations of Enron’s off-balance sheet partnerships began making Enron’s bank creditors extremely nervous. At the outset of the meeting, Greg Whalley, Enron’s chief operating officer, fired Andrew Fastow as Enron’s chief financial officer and replaced him with Jeff McMahon, who Fastow had canned as Enron’s treasurer a year and a half earlier after McMahon had objected to then Enron CEO Jeff Skilling about Fastow’s conflict of interest in managing the partnerships:
The men made their way to a tiny conference room upstairs, crowding around an oblong table. Fifteen minutes later, Whalley blew into the room.
“O.K., let’s get going,” he said. “Let’s start with the organization first.”
Whalley shot a look at Fastow, pointing at him.
“Andy,” he said rapidly. “As we discussed, you’re no longer C.F.O., effective right now.”
Fastow’s face fell. “Wait …”
Ignoring Fastow, Whalley swept his arm across the table, pointing at [former Enron treasuerer Jeff] McMahon.
“Jeff, you’re now C.F.O.”What was that? McMahon wasn’t sure he heard Whalley correctly.
“Excuse me?” McMahon said. “I’m C.F.O.?”
“Yes, you’re C.F.O.”McMahon glanced across the table. Fastow was shaking his head, looking shocked. The moment was surreal.
“Wait a minute!” Fastow sputtered. “That was not my understanding of the deal!”
Whalley held up a hand. “Andy,” he said, “I don’t know the legal stuff. You get with Ken and work it out.”That was it. Whalley turned away from Fastow.