A couple of NY Sunday Times articles reports on the success of a number of former Enron executives. However, in doing so, the Times misses a major point that is sadly lacking in most mainstream media accounts of Enron’s demise.
This interesting Alexei Barrionuevo piece examines the rebounding energy trading business, a productive and profitable sector of the economy that was virtually shut down in the aftermath of market-maker Enron’s bankruptcy case. The article does repeat a few of the common myths about the energy trading business, such as “traders manipulate markets,” “trading increases energy costs,” and “traders caused California’s power crisis.” Overall, though, the article does a good job of presenting how bright, young traders — many of whom formerly worked for Enron — invested their own money when the energy trading industry almost ground to a halt in early 2002 and now are profiting as the comeback of this valuable sector of the economy provides companies flexibility in providing for — or hedging the risk of — their energy needs.
Meanwhile, this Times article notes that Rich Kinder of Kinder Morgan Inc. was recently named chief executive of the year by Morningstar, Inc. Kinder is a former long-time Enron executive who left the company in 1996 to set up Kinder Morgan after six years as president when former Enron chairman and CEO Ken Lay passed him over for the chief operating officer position in favor of Jeff Skilling.
The Times blurb on Kinder implies that Enron’s monkey-business began after Kinder left the company, and that is certainly true with regard to former Enron CFO Andy Fastow’s shenanigans with certain special purpose entities. However, the Times fails to note that the vast majority of business activities that made Enron such an extraordinarily successful company during the 1990’s — both in its primary business activities and in the ways in which it raised money — were taking place while Kinder was Enron’s president just as they were five years later when the company collapsed into bankruptcy. Unfortunately, an enormous and unnecessary loss of wealth occurred as many of the markets for Enron’s beneficial and innovative financial transactions — such as the energy trading industry and structured finance use of derivative pre-pay forward contracts, to use just two examples — shriveled in the wake of the societal demonization of Enron during 2001 and thereafter.
Consequently, Kinder’s success after leaving Enron actually emphasizes a point that the Times and much of the mainstream media completely misses — i.e., that it is critically important in determining the truth of what happened at Enron to distinguish between Enron’s role as a legitimate, innovative company and the limited fraud that took place. As noted in this prior post, the Enron Task Force is currently struggling with that realization in its prosecution of Lay and Skilling. A more truthful analysis of Enron’s demise would likely result if much of the mainstream media would catch on and take notice, too.