Enron - The Black Box | 2
The the enron chief financial officer andy fastow was about to kill an alligator. That's what former enron ceo rich kinder used to call it he. He said that enron's problems were like alligators and to fix them. You had to get in the swamp kick out all the alligators and kill them one by one fast. Al likes to remind himself of this. Every time someone at enron becomes a problem and when that happens it's time to go alligator. Hunting fastow gets out of his chair paces with each passing second. He gets a little angrier then. There's a knock at the door. Today's alligator has arrived. It's open jeff mcmahon enters the enron corporate treasurer glorified accountants more like it and fastow hates them. You wanted to see me andy yeah. How'd you meeting with jeff. Go my meeting with breath jeff skilling slip your mind. You don't remember speaking jeff behind my back andy. Do we really have to do this. Your problem talk right now. Find the current situation with l. j. M. is completely untenable. Is it yeah you're enron c._f._o. But separately you run l._j._m. J._m. an investment fund that does all its business with enron aso so this is a conflict of interest bankers at maryland. I union colony. You've launched l._j._m. To now and you want them to provide debt financing and you're threatening to pull enron's business altogether if they won't do it and also enron. Iran employees are telling me that when they negotiate with l._j._m. It strongly implied that if they fight for themselves too hard they'll be punished with negative performance reviews over at enron will andy. This is a completely out of control fastow clinches. None clutches his fist. He can feel the heat in his face knowing he's turning red. You wonder what would happen if he just hit mcmahon right here in the office. He could probably get away with it. There's no need for such extreme measures yet jeff. I don't know if we can continue. Can you working together and what you talking about l. G. m. is legal. Elgin is good for enron and as an employee of enron. That should be good enough for you. I need to look out for my shareholders. Look out for them then. That's not my problem you think. I don't know what this is about. You know l._j._m.'s great idea. You're just mad. You didn't think of it first first and instead of coming up with something innovative on your own just trying to tear down when i built it's lazy and it's unethical on your calling me. Unethical your little trick with nigerian barges. Come on. I know everything happens in this building and everything you say skilling gets back to me everything breath so just thinking about that next time you wanna run crying him like a little bitch. Get out mcmahon just stares back at him trembling with rage. He can't express breasts fast doctrines. He knows skilling will soon have mcmahon transferred. He'll no longer be able to stick his nose and fast business. Look at him broken broken man with nothing left to say just looking down to the carpet fast. I watched some trudge back toward the elevators. If mcmahon didn't understand before who really runs things at enron does now american scandal is brought to you by chase. It's a big decision asian and one you've been preparing for but you weren't quite expecting it to be such an emotional. Your kids grew up in this house. Frankly you grew up in this house if you're honest but <unk> aside you don't need these extra bedrooms this young couple. Does you've seen them tour this house. At least twice you recognize look in there is hope fear you've had some worries to what if you sell before he found a new place what after closing process drags on and you're living out of some motel but you've got that covered <hes> the chase customer you're guaranteed to close on your next home quickly or you get one thousand dollars so no storage units. No motels chase gets you in your next home. Faster faster learn more at chase dot com slash g._s. chase make more. What's yours all home. Lending products are subject to credit and property approval rates program terms and conditions are subject to change without notice. Not all products are available in all states or for all amounts other restrictions and limitations apply home lending products offered by j. p. morgan chase bank thank n._a. An equal housing lender uh from wondering i'm lindsey graham and this is american scam as the twentieth century drew to a close enron was arguably the number one company in america the c._e._o. Ken lay c. o. jeff skilling and c._f._o. Andy fast out steered enron into new businesses and greater profits than ever before but it was all an illusion those at the top of enron manipulated quarterly statements and employed any loophole could find in order to deceive shareholders and stock analysts sts and throughout the nineteen nineties these schemes succeeded brilliantly but in two thousand cracks began to appear in the company's carefully constructed facade enron's leaders rushed to capitalize on energy deregulation and california they propped up company balance sheets by increasingly fraudulent means and in the process they made some mistakes mistakes that would cost them in imperceptible ways until it was too late. This is episode to the black box in may of two thousand. Tim belden head of enron's western electricity. Trading desk is having a ball. It's been a year since he. I figured out how he could trick the california energy market into over paying for electricity and do it legally but belden isn't some kind of criminal law. Oh wife he has a masters in public policy and spent five years as a researcher at lawrence berkeley national laboratory most importantly he has what enron executives liked to call intellectual purity meaning he answers to know god but the free market and will exploit institutional inefficiencies for cash belden leans gazza's gets his desk tossing a nerf football in the air he looks at his troops of about ten or so traders all of them intellectually pure just like him. It's time to take stock of the latest strategies to gain the california energy market and make millions in the process. There's the classic submit a scheduled to reflect a man that doesn't exist to drive up costs call that one fat boy then there's the old file transmission schedules then get paid to relieve the system of congestion. That little maneuver goes by the name death star. Ooh mellon asks if there are any new ideas. One trader suggests enron could sell power. It doesn't actually have for use as reserves. Enron will probably never be asked to supply the power anyway or could buy back later at a lower price. Belden loves it now. Call this latest scheme. Get shorty coming up with these fun. Codenames is his favourite part but one of the trader says he's concerned about something he knows that what they're doing is legal just maximizing the loopholes and california energy law but even so isn't this all ethically questionable belvin laughs who let this buzzkill in the building. He explains at enron isn't in the business of doing what's what's best for the state of california. It's in the business of doing what's best for enron. If you build a house with no doors and fill it with valuables don't be surprised if it gets robbed mm-hmm belt and asks for more ideas and several traders start talking at once. It's music belgians ears and he doesn't feel an ounce of guilt. His team puts the hours into studying cutting all this complex and convoluted policy. They've done their homework and now they will reap the rewards. Rebecca mark sits in the boardroom at enron in houston staring at a bunch of middle aged suits with frowns on their faces. She knows what they want. They want her to throw in the towel. Admits mitch she was wrong and walk away. She drums her fingers on the table organizing her thoughts. She's never given up before and she's not about to start today. The most important everything is to stay calm. If she gets rattled she's done. She knows that and sodas jeff skilling and that's why skilling doing his very best to rattle her. Uh jeff skilling looks at each of the board. Members intern and digs in provecho's said we should get into the water. Business said she could run it. We'd make billions. I told you you all. I didn't buy it. Would you side with her anyway. I accept that even freed up some enron cash to get the new business on its feet. Well we all know what happened. Next as eric's makes her brilliant plan to conquer the water industry drowned rebecca. Mark can't contain herself jeff. That's not fair you know who started with two hundred thirty two million dollars in operating profit. Now you're down to less than one hundred as their stock is trading at three dollars and fifty cents a share. We've we've made some missteps but were correcting them. Restructuring moving into internet as rex is something completely new and we're building something unprecedented. They're going to be some bounce along the way pumps. Your outfit is two billion in debt. One more bump like that and enron is over. Why won't let it happen gentlemen. It is time to shut this thing down. Let me figure out how we're going to say this company. This company that rebecca mark through her negligent and stupidity is doing her very best to destroy. It takes a moment for mark to process jeff. Just said she knew skilling was going to hold a gun to her head today but she didn't know he'd pull the trigger. Mark looks at the other board board members. They avoid eye contact. Even ken lay the past. She could always count on him now. For the first time she sees a look of genuine anger on his face anger directed at her. She's committed the one unpardonable sin lost money for the company. Mark swallows hard and response in the strongest voice voice she can muster. I don't agree with just analysis. I believe that as rick's will pay off in the long run and if you give me the opportunity. I'll show you skilling. He says nothing in reply he doesn't have to it's lay who in quiet voice response rebecca. It's over with those three words rebecca. Mark told that after fourteen years of service she's finished at enron. She collects her papers and stands unlike for another meeting. I regret what happened with as rex true but once you all to know that it would have worked just needed time. Rebecca mark always knew jeff skilling wanted enron all to himself and now he's got it with her out of the way he will no doubt be named c._e._o. We all within a year or two. We'll good for him. She thinks hope it works out as she exits the boardroom. Rebecca mark coulter had high. She played well but she lost still no shame in that in october of two thousand richard richard sanders head of litigation for enron north america trips over a remote control car benz down to peel away twix rapper stuck to his shoe like he's heading ended the bedroom of his nine year old son but no he's in enron's western energy trading office with several of his attorneys time for him and his colleagues to have a chat with tim. Jim belton all ten t._v. Screens around the office are tuned to the same news report. No one can quite figure out how the fifth largest economy on earth wound up with a power shortage california is in the grips of a full blown energy crisis with rolling blackouts plunging homes schools and hospitals into darkness sanders looks around stunned. The traders are laughing. The most well educated and well compensated young men in america and they're wreaking havoc havoc with the state's government for their own amusement while they're not doing purely for laughs. They're also making an obscene amount of money for enron the head honchos and houston clearly aren't complaining but they've sent sanders to talk to belen. I just want to make sure that he's not doing anything. That can't be explained down the road. If necessary sanders approaches belden casually leany back in his chair feet on his desk immersed in the graph scrolling on his computer screen upon seeing sanders belen smiles wide right and cheerfully shakes hands with them and the other lawyers sanders asks if they all might speak privately in the nearest conference room and once seated sanders doesn't waste time he needs to. I know exactly what belden is doing. He cautions him that he is not belgians lawyer so if he says anything incriminating sanders could use it against him to protect enron's interests but if that worries belden at all he doesn't show it in the slightest he bounds over to a whiteboard and starts drawing. There's the ricochet project which experts power from in california than imports at back at higher prices of course it ought not to be mixed up with death star fatboy. Were get shorty. These are all little games. May hey to exploit california energy lawn to enron's advantage. He explains but don't worry yes. These strategies are so complex that they'll fly over the heads of lehman and fortunately for enron all california energy regulators appear to be lehman. He finishes by placing the cap back on his diaries marker. You will now take questions. Sanders begins to speak and stops. He is utterly almost cartoonish -ly dumbfounded the only response he can manage is a simple question. Is it too late to change the nicknames. Something more innocent like puppy dog or mama's cooking belden giggles but to sanders. It's clear that thanks to tim. Belden and ron is definitely going to get sued. It's raining in houston. When sanders sanders returns to his office the weather fizzes mood. His team looks just as concerned does he feels california's. Energy crisis is about to become a major p._r. Crisis his friend ron sanders can't get out ahead of this thing and along with belden. They've got andy fastow to worry about l._j._m. All the rest of fastow special purpose entities uh-huh created a minimize the appearance of losses but they're on the very margins of what the law tolerate. It's not time to panic yet but everyone must be on alert if enron lands on the front pages at the wrong time the company's reputation will be on the line as never before american scandal is sponsored by policy. Genius september is national life insurance awareness month. Most people aren't aware of that. In fact most people aren't that aware of life insurance at all and that's why forty percent of americans don't have it but getting life insurance doesn't need to be difficult or expensive because is right now. Prices are the lowest they've been in twenty years and policy genius has made it easier than ever to get covered policy. Genius is the easy way to shop for life insurance online in just two minutes. You can compare quotes from top insurers to find your best price and once you apply the policy genius team will handle all the paperwork and red tape no sales else pressure no hidden fees just financial protection and peace of mind and policy genius doesn't just make life insurance easy they can also help you find the right home insurance auto insurance and disability insurance so if you need life insurance but you just haven't gotten around to national life insurance awareness month is good times to get started. Go to posits dot dot com get quotes in applying minutes. You can do the whole thing on your phone right now. Policy genius the easy way to compare and buy life insurance you it's early two thousand one and tim belden is annoyed. He's over in the the office snack area and there's no sign of chips. He likes he specifically told the new girl to restock the chips. You'll have to talk to her. Maybe even let her go. He's still still deciding about that when the phone is desk rings probably unimportant but he rushes back anyway when he sees a two eight one area code he knows it's his bosses in houston houston. This could be bad. He might have pushed death star one too many times. His head is spinning. He picks up the phone with some reluctance. As if it's a snake on the other end of the line the enron executive talks and tim belden lists when he hangs up the phone just stands there in shock the peers that's in california legislators are looking into their energy crisis and are beginning to point the finger at enron california. Citizens are a bit more enraged over the blackouts. The executives -secutive anticipated but tim belden doesn't need to worry about any of that because he's getting promoted. Now won't just run enron's western energy trading he'll. It'll be the new managing director of all energy trading nationwide. His hustling on the california grid has netted enron two hundred fifty four million dollars and that's it just for the month of january. Belden is so filled with joy. He's almost teary eyed. Then he sits down throws on his headphones cranks up the volume. He gets back back to work back in houston. Ken lay looks at the sea of enron employees gathered to hear him speak. There's hundreds of them on the trading floor. Knee appreciates each and every one enron is a truly magnificent company and he takes a brief moment to reflect on all he's accomplished. He realizes that the day will come when he'll miss moments like this even though he hates public speaking lay steps the microphone and begins first of all lay says they should know that the administrators in california are way off base blaming enron for its problems there have been a lot of finger pointing the press lately and lay finds it all very unfair where people at enron have too much integrity to try and quote game a whole states energy system then he tells those gathered that lay can explain what's really going on here so california didn't deregulate properly the handle deregulation piecemeal. They didn't commit california's refusal to embrace a truly free market has led to its present embarrassment skilling warn them lay himself on them deregulate fully or not at all. If you don't you shouldn't be surprised when you run into problems and that's the end of it. Enron has done nothing wrong and no one need be concerned about statements from california's attorney general calling for lay to be jailed he chuckles. It's a bit remembering a great joke that skilling made the other day you know what the differences between the state of california and the titanic at least the lights were on the titanic went down and as les leaves the podium he thinks about the future late last year he made a decision in two thousand one he would step down and skilling would replace s._e._o. Of enron as of today the transition is due to take place in about three weeks and ron has had an incredible sixteen year run under skilling lays confident that the next sixteen and beyond will be even better in march two thousand one in the enron office lobby. Jeff skilling hits the button and waits for the elevator to arrive. He stares at the arrows. One goes up one goes down. Life is a lot like that occurs. I to him only in life. You don't always know which button you've pushed out of the corner is ii skilling spots and approaching enron employees guys prompting accountant or something one look at skilling's face and he backs off this is not take the elevator with the boston grabbed the next one the account the cells king right you will aw skilling thanks hanters the elevator alone and begins to ascend skilling things back to twenty four years ago. He was twenty three years old trying. Wanna get into harvard business school. His grades weren't quite good enough though and the deans on the fence they meet at the houston high for a final interview white-haired dean peered at the a young m._b._a. Candidate and asked a simple question skilling. You smart skilling looks him straightened is with no hesitation. I'm king smart. He replies applies but recalling that now skilling's fist clinches yourself king smart he thinks with a can you figure this out. The elevator doors open skilling marches down the hall with a scowl. He sees the people at their desks in their offices looking busy on the phone typing away but they're useless useless every last one of them. None of these people can tell him why enron stock price is falling. It was at eighty at the top of the quarter today. It's at fifty five live. Enron stock price does not drop but now all of a sudden was skilling at the helm. It's plummeting and the media's beginning to take note skilling. Secretary secretary says he's right on time. She has the reporter for fortune on the line. <hes> skewing winces he forgot he agreed to this. He doesn't like reporters. Especially since the wall all street journal published at hit piece a week or two ago volatility in the natural gas and electricity markets will hurt ron's investors down the road. It claimed everyone should should be wary of enron's mark to market accounting strategy. The company isn't financially transparent enough wining totally uncalled for skilling thinks he he should sue skilling slams the office door behind him sits at his desk and takes call reporter identified herself as bethany mclean with fortune magazine zien. There's something in her. Tone skilling dislikes already. She sounds like a new york. Note all twenty something taking shots at someone who actually matters one one by one. She asks her questions. How exactly does enron make its money. Mr stealing your financial documents unusually difficult to comprehend mr skilling some call enron and blackbox as in. It's impossible to understand from the outside what's happening inside. Mr skilling skewing looks out the window. You wants to just go home. I have to go to a meeting. He says she starts talking again but skilling cuts her off now you really don't get anyone who's successful people want to take down based on ignorance and he slams the phone down interview over skewing takes a deep breath actually felt good hang up on her. You smiles for the first time all day. He is still jeff king smart skilling and he is still in control but his smile fades for the first time in a longtime enron might be in trouble if feels like the doctor grimly examining your x ray then calmly asking have seat feels like an end bethany mclean thirty one is in a conference room at fortune in new york reviewing her questions moves down the type page lightly taps each bullet point with her pen. The men from enron will be here soon. She waits for them alongside fortune editors jonas sarah and jim in poco the room. They sit in dark windowless. It's usually just a place to review photos but it was the only space available deadlines nearing. It is what it is but it sends the wrong message mclean thanks. This is not an inquisition. She's not trying to bring enron down. She genuinely wants them only to help clear up a few things things that once explained she knows we'll help wall street in the business community breath easier. She would've explained that to skilling and he gives her the chance but instead he hung up on her and within hours of that panic enron p._r. Person call to apologize. Mr skilling regrets his earlier behavior man said it had been a tough day skilling ascending any executives from houston to new york immediately to meet with mclean personally clear up any concerns about enron. She may have the enron representatives. Arrive is promised they file into the dark conference room at ten a._m. On the dot all smiles and handshakes ahead of corporate communication mark palmer head of investor relations mark haynick in the famed aimed financial prodigy himself enron c._f._o. Andy fastow fascinating is back in his chair and lifts his hands outward an. I'm an open book gesture as he begins. Let me just start by saying that enron is diverse dynamic provides customers with optionality. The way to understand enron is the think of toyota mclean claim joss down toyota with two question marks. What does this guy talking about. She also can't help but notice that fast out just went out of his way to ignore her presence. He directed his opening entirely to her two older male editors interesting. She responds if i may mr fast and i'd like to begin by asking you the same question. I posted mr skilling. How exactly does enron make its money. Mclean wonders if she's the only one who catches the momentary look of loathing passover fastow's face with a tight smile fastow looks back at her male editors and says we're a logistics company with a number of interlocking businesses that span the globe the full nature of which are simply beyond the scope one. I might explain in single meeting here but you can ask the analysts thirteen out of eighteen rate enron ron stock a by. I think that right there speaks for itself. Fast now takes a sip water then continues much like toyota we just negotiate our suppliers arrive at costs and well. You're smart. You can see what i'm getting at. Mclean feels like alice at the tea party. She looks at the enron exec flank fast they nod emphatically. She looks at her editors in poco sarah who looked the wilder so good. It's not just her fast is not making any sense. You're so she tries another question. Maybe you could offer some details and just basic layman's terms as to how enron so reliably generates profits on a quarterly early basis fastow raises a quizzical eyebrow than answers well. Unfortunately we do need to keep certain specifics confidential for competitive reasons but at what what i'm getting at here is that in terms of enron success where exactly like toyota detroit used to own every aspect of automobile manufacturing then toyota came along he said well. We'll hey we just wanna build the best cars you know so <hes> toyota outsource the various components that make up a car transmissions radios everything else they they went to whatever manufacturer's sold the best at the best price and well. We're just like at enron. We find the best. What is with this guy and toyota mclean claimed thanks toyota and enron are not remotely the same a high school economics student would be able to tell you that the claimed frowns fastow opens his mouth to speak again but fortune editor. Jim poco has run out of patience. Mr. fastow. I'm sorry you've got to drop a toyota. Analogy doesn't make sense tells me you don't. I understand your own company. I'm having a hard time figuring out what you're trying to say about enron tense moment follows in fast bursts out laughing laughter that mcclain would describe grabbers nervous. She decides that playtime is over. I read about the related party transactions involving l. j. m. What can you tell me about l. J. m. mr fastow down. The smile is wiped off his face. The other exact shift in their seats editors leaned forward in unison for a moment. The room is so silent. You can hear the vacuum running faintly down the hall fastow picks a piece of lint off his sleeve and tosses on the floor jaw tight he responds. All i can tell you is that our senior executives run that fund. Anything further is confidential. I see well. I think that about does it right. Yes gentlemen we the few other appointments who tend here in the city trusted. If there are any further questions he won't hesitate to reach out to my secretary. Fast down the others from enron stan and straighten pursue jackets one opens the door and they begin to file out the clean and the editors say goodbye then fastow stops in the doorway and for the first time looks directly elite mclean says look. I don't really care what you say about the company. Just don't make me look at and he's gone. Mclean looks at her editors. Camila needs to say it out loud. The situation at enron is clearly worse than they could've imagined. They're gonna run mclain story immediately weeks later back in houston andy fast out angrily shouts pay for it from his desk into his office. Shredder truth be told. He doesn't even know what he's shredding but it seems smart to shred it. All fortune magazine really screwed things up. He tried to be nice tried to explain and they repaid his is kindness with an article by bethany mclean called is enron overpriced now everyone's up his ass the pointing the finger at him when they brought him in and they made it clear that enron had display constant quarterly growth. We need you to make that happen. Andy said he understood and he worked hard worked. His way up came up with ideas. They couldn't cover them when they couldn't cover themselves. Andy fast output enron. I he was good employees. No one's gonna make him feel ashamed of that. No one especially not the three men currently standing in his office doorway. There's chief accounting officer rick causey fastow's house right hand at the company michael copper and lawyer jordan mintz men's that leads the charge tells fast out that the stock prices at fifty dollars and reporters are snooping around the other day frontline essentially accused the company of pillaging california and laughing all the way to the bank while the state suffered the men are here to confirm fast has given up all personal stake in eljay fast. Our explodes skilling told him two weeks ago so of course he did did. What's the problem copper. His right hand is apologetic accounts in writing. They need fast down to sign a letter from arthur andersen declaring that he's given up all all interests in l. j. m. if signs the letter. They'll get out of his office and never bother him about it again. Fast has some choice four letter words for the bean counters at arthur granderson shares them at the top of his voice then he tells copper to give him a goddamn pen so he could sign when it's done fast outfits. He looks three colleagues and says look. I'm sorry it's just that i created algae and it means a lot to mean zoologist pretty emotional. I think you can understand the three men sure sure they get it and everything's fine and quietly they leave his office working at enron with a lot more fun in the nineties fast out things the nineties are over and now it seems that a new era has begun andy fast out gets back to shredding time to prepare for war. Sherron watkins returns to enron's offices following her lunch break. There's a noticeable lack of spring in her step. It's not the things going poorly exactly. She just feels like occur. Strengths could be better utilized elsewhere who was recently transferred to enron broadband tasked with implementing cost controls. The feels like she's running. A daycare employs a broadband or mostly bunch of spoiled brats what she tries to do her job that yell at her not her fault that they lose more and more money every month because they're deals don't account. Maybe it wasn't so smart partner up with blockbuster video. Then jim fallon took over walking known him for years and never liked him. She tried to make make suggestions informing him. How broadband might be saved. His response was to suggest she look to transfer to a different department in the company. Walking's is all too happy to do that but where wear this is the question she's mulling over by the elevators when she feels a tap on her shoulder. Walking turns around and sees a man. She hasn't spoken to in a very long time sandy fast down. He's charm owed. It wasn't so long ago that he was berating her joking about enron's accounting practices but everything changed when she transferred from his division division and made v._p. After that fast viewed her more as an equal now he says it's nice to see her and asks what she's up to these days. Walk ins relates the whole sorry sorry tale of her adventures and broadband and he listens respectfully and shakes his head at the stupidity fallon then fast eyes light up since she's looking for a new place to land land why not join his team will be just like old times that night. Walk ins calls her old friend jeff. Mcmahon mcmahon is easy to talk to with gift. Walk ins lax for seeing all the angles. She was distressed to hear rumors that he'd come out on the losing side of a power struggle with fast fastow though it seems like things wound up okay for him. His current title is c._e._o. Of enron industrial markets walk ins tells mcmahon about fastow's offer it is enticing watkins would evaluate potential deals and bring the strongest wants to his attention and fast out has told her that if she finds a good deal on her own she can put her name on ensuring that she'll get all the credit should the deal proved lucrative mcmahon listens patiently and says it's entirely her decision but he wouldn't recommend working with fastow asto watkins asks. He's just saying that because he has a personal problem with fast down. Mcmahon assures her he doesn't. He just thinks it's a bad idea. Walking's thanks for the advice. She says she'll continue to mull it. Over on march twenty second two thousand one and jeff skilling looks at the conference table the chairs the faces surrounding him he wonders if the decor and here was always so dreary everything appears to be a different shade of grey rain could have sworn it used to look warmer and hear more inviting perhaps did in the better days the days when the stock price soared inched everyday towards one hundred bucks a share. They're not stuck at sixty. At least that's an improvement from last week. When it was fifty five skilling won't admit defeat yet he sips his diet coke and starts art bobbing his head like a fighter approaching. The ring getting himself pumped up he nods at his assistant to get the conference call rolling most of the board members around around him at the conference table. Once couldn't appear in person have dialed in including ken lay now serves as enron's chairman. There are also a number stock analysts and shareholders is on the line with a broad smile. Skilling looks down on the polycom speakerphone in front of him and gets to it well we did it. We beat our first quarter. Earnings estimates by two cents a share an outstanding quarter another outstanding quarter. We're very optimistic about each of our businesses and confident that our record growth is sustainable for for many years to come any any questions richard from here with highfields capital <hes> straight about your earnings and all jeff but the investors i represent read the wall street journal and they read fortune fortune so we want to see a balance sheet for your company and we're tired of waiting for scheduling feels like a bucket of ice water was just pour overs head. We do not have the balance. He completed needed. We will have that done shortly when we filed a quarterly report but until we put all of that together we just cannot give that to you. Skewing things that should satisfy him when he shocked in grubbing dares to speak again contract to understand why mine would be an unreasonable request. I'm not saying we can't tell you what the balances are. We clearly have all of those positions on a daily daily basis but at this point we will wait to disclose those until all the right accounting is put together and you're the only financial institution that cannot produce a balanced gene or the cash flow statement with earnings skilling sees at the board members look nervous. This is bad. He's losing the room. He talks his collar tries to affect and affable tone and says well. Thank you very much. We appreciate you appreciate it. Asshole skilling. Here's the gasps and sees the drop jaws but he smirks yeah so what that prick took a swing at him so skilling swung back called balls. You're lucky the c._e._o. Has a pair a young associates. Scurries over with a note on is written one word apologize skewing takes the note wade's cutaway shoves it under some papers that sensation of being thousand ice water returns call ends skilling watches the exiting board members and realizes he hates them. All he hits this job. He hates this company. You must fall is beginning to hate himself. Ken lay sits in the office of the chairman. He comes and goes says he pleases. These days thought like when he was c._e._o. And practically lived in this building looks out his window at the setting sun and reassures himself that he made the right decision he does not think of himself as a man capable of making mistakes not when it comes through the important things to spend a few days since he heard that jeff skilling called the hedge fund manager and asshole on the conference install such a lapse in judgment would be unforgivable in the lesser man but lay trust scheduling c._e._o. Is a high stress job. Lay can't expect everyone to handle the pressure as well as heated and this morning skilling call and asked if he could meet today lay of course said yes he certain his c._e._o. Just needs a little friendly council a bit of advice. Maybe he wants to personally policies which is good because lay is in a forgiving mood. He's ready to share his wisdom. Yes enron is in a bit of a storm right now but he certain scaling will do what needs to be done to turn things around. Their meaning was supposed to begin at five but it's five three. It's not like stealing to be late then five zero seven the c._e._o. Of enron stumbles in shirt untucked unshaven face hair skew her bags under his red eyes. He throws himself into the chair opposite lays desk and just sits there. They feel something he hasn't felt since he was a small child fear. This can't be the create jeff skilling. He thinks this can't be the man that i've entrusted with my company. My legacy what lay is looking at is a drowning man. Skilling's voice quivers all spills out of everyone warned him not to go to california but he wasn't going to hide he was going to stand up for the company. People in california california wanna get mad about their traffic lights not working. They should talk to their elected. Officials enron didn't create their problems but once in san francisco he couldn't believe what awaited him hundreds of protesters some of them wearing masks of his face jeff skilling stop the killing chanted fears he would be assassinated prompted san francisco police to install metal detectors at the doors at the commonwealth club where he was scheduled to speak he was just there to defend enron to show the people he did nothing wrong and he was midway through a powerpoint presentation. When there was a commotion before he could react something clipped the side of his head. He became aware of security dragging a woman coming toward the exits. He touched his ear and pulled away white chocolate. The woman had heaved a pie face. Skilling pauses staring off into the distance. I wanna resign. He says he's taking the declining stock price personally. You hasn't been spending enough time with his kids. He feel you'll sick all the time. He can't sleep lay feels many things at once disappointment disgust confusion anger but also concern. He asks killing if there's any other reason that skilling doesn't want to be c._e._o. Anymore skilling jason's head. There's nothing else going on and he stands runs. This is han through damp hair and offers a limp handshake. He turns without another word leaves the office. I wonder what the hell just happened and what the hell ellwood they gonna do next. Lay took it well-selling thanks but it doesn't really matter though he feels like he's being being pulled apart the company he just abandoned his in a noose and tightening all worked fine as long as wall street didn't look too closely at the numbers they haven't found anything yet but they will then they'll understand that when it comes to enron there are facts and then there is fiction when the investors find out that for over a decade they mr one for the other. It's gonna get ugly but skilling was able to cash in a few hundred million dollars worth of enron stock before he tendered his resignation may not have much but but at least he has that he is still rich. Sherron watkins is in her new office at fastow's floor staring down at the accounting documents in front of her. She feels like throwing up. She's just met any fastow's raptors off book entities created protect enron against losses from underperforming assets. Walk ins knows that what she's looking at can't be explained and it can't be justified. She is just uncovered the truth about fast now and it's this andy fastow is a criminal and he will get caught in when he does. He will fall hard in the process. Take enron down with you've next on american scandal. Sharon walk ins attempts to blow the whistle. Ken lay comes under fire fire as enron goes from being the most celebrated company in american to the most aided from wondering this is american scandal. I hope you enjoyed this episode. If if you did subscribe now on apple podcast spotify google podcast wondering dot com wherever you're listening to this right now if you're listening on smartphone tap or swipe over the cover onto this this podcast who find the episode notes whose details humaneness you'll also find some office from our sponsors by supporting them. You help us offer this show to you for free. We'd also like like to learn a little bit about you. Complete a short survey at wondering dot com slash survey. That's wondering dot com slash survey. We'd love to learn what you're listening to. What you like. Take what topics we might tackle next you can also find us and me on twitter search for hashtag american scandal or follow me at lindsey ancram we use many sources versus when researching are stories but we highly recommend power failure by mini shorts and sherron watkins the smartest guys in the room the amazing rise and scandalous fall of enron i- bethany mclean lane peter l. kind and conspiracy fools a true story by kurt item all and just a quick note about our reenactments can't always know exactly what was said but everything in darshan is based on historical research merican scandal was hosted at an executive produced by me. Lindsey graham for airship sounds i by derek barron's. This episode is written by a handle diaz. Our senior editor is karen low. Executive producers are stephanie jen's jenny lower beckmann and her non lopez for wondering.