24 Days (Hardcover)

As a management consultant, I once visited Enron to discuss the possibility of taking on an assignment for them. While there, I was baffled by the supreme self-confidence that the executives displayed that nothing could possibly go wrong. The only other time I had run into self-confidence that great was with a computer game company just a few months before its business evaporated and it filed for bankruptcy. I should have realized that that precedent was a portent.

I never could understand where all of the Enron earnings came from. It seemed impossible that the trading operations could have been that profitable, and everyone knew that the company had overpaid for almost all of its utility operations. I never suspected, though, that the whole thing was a charade based on corrupt accounting. I admire the authors for helping peck that facade apart to reveal the underlying house of cards.

Before considering this book, let me remind you of a few things. First, how much do you really want to know about Enron? The story was well covered in the press and on television. I read almost all of the Wall Street Journal stories at the time, so reading the same material again didn't add much for me. Second, do you really like to understand the intricacies of accounting rules? Much of what Enron was doing will be hard to understand unless you are pretty competent in accounting and like to appreciate the finer points. Third, are you willing to wait to the end of the book before you understand the nature of the Enron illegal actions? The exposition style captures the process of unraveling the mysteries in historical sequence. If you decide want to learn all you can, then this book is for you. If not, you might just look up an article that summarizes the fraud.

As for me, I didn't really want to know any more about Enron. But I did want to know how the story was developed by the Wall Street Journal. I was particularly impressed by how many people offered valuable information to the reporters after they began raising questions in their articles. Otherwise, Enron would probably still be operating. In addition, I was fascinated by the ways that Enron typically answered the reporters' questions in misleading ways (or actually lied). You would have had to assume that someone was doing that on purpose to have been adequately paranoid to have kept plugging away.

Ultimately, the big eye-opener for me was that so much of the Enron fraud had been disclosed to the SEC in public documents. Neither regulators, nor security analysts, nor portfolio managers, nor journalists nor competitors spotted that anything was wrong until after Enron's CEO, Jeffrey Skilling, unexpectedly resigned. Clearly, the theory about the efficiency of financial markets wasn't right in the case of Enron. Let the investor beware!

I came away from reading the book convinced that there are other public companies out there hiding losses and debt in off-balance sheet transactions that are not fully disclosed. Whenever I cannot see where the profits are coming from in the future, I won't buy a stock. That was the key lesson for me.

I would like to congratulate Ms. Rebecca Smith and Mr. John Emshwiller on having done a wonderful journalistic job with the story for the Wall Street Journal, and in providing this book as a guide for future generations of financial journalists.

After you finish enjoying this fine journalistic story, think about where else the public representations may not be what they seem to be. Be skeptical!