In the belly of the Enron beast

The stock price was tanking and the company was coming unraveled -- but Chairman Ken's weekly message to workers at Enron's posh London office was, "Everything's fine." We believed him.

Published January 25, 2002 8:47PM (EST)

The day of my interview I had a stomach full of butterflies and a heart full of apprehension. Since I'm not a baseball fan who'd have heard of Enron Field and energy trading isn't my calling, the name Enron rang no bells in my head when I was invited to interview for the job as a software contractor. But a quick scout around the Internet revealed a tale of a global Goliath -- a company that had quite literally come out of nowhere to dominate its sector, turn over billions of dollars and even lend a helping hand to the Bush administration from time to time. In size and structure, it was as close to Microsoft as any other company I'd come across in recent times, and in terms of the people it hired to work on its technology systems, it was the Redmond giant's equal. To a programmer, that's something that instantly sparks a mix of fear, apprehension and excitement.

Enron's London offices, which had recently won awards for being the best workplace in England, were designed to strike terror into the hearts of interview candidates and competitors. A circle of Romanesque pillars surrounded an ever-flowing waterfall, flanked on all sides by art nouveau sculptures and paintings. Overseeing them all, a huge video wall constantly ran promotional videos about Enron's activities, while at one edge of the foyer a gleaming, unused BMW Z3 enticed employees to hand over their friends and family to Ken Lay in order to enter a bimonthly raffle to win the elite sports car.

Every need of the carefully cultivated workaholic workforce was catered to. A gym, open day and night, played MTV and offered health, fitness and stress management classes. An Italian restaurant served a never-ending stream of mochas, cappuccinos, custom-made sandwiches and pasta dishes. A small convenience store supplied newspapers from around the world, as well as the usual array of high-energy junk food that every trader and programmer needs. There was even a pharmacy and dry cleaner, a post office and a place for getting your photographs developed.

In short, once you were in, Enron wanted to make sure you never ever had to leave. And for those rare occasions when you had to exit to face the family, you could buy one of the always available bunches of flowers on your way out the door.

The interview went well, although at the time it didn't feel like it. My interviewers made it clear at every opportunity that Enron employed only the very best, and they expected the world from their staff. The chap who was to ultimately become my boss was serious beyond belief, probing me with every tricky, sweat-inducing question he could find, all the while keeping a deadpan face and a monotonous drone in his voice -- no doubt the product of a sleep-deprived week spent driving new trading systems into place.

The online systems they were hiring for were the largest in the world, trading billions of dollars a day. The staff who worked on those systems were the top people in their field; their previous employers read like a who's who of the financial and information technology sectors: Deutsche Bank, RBS, Warburgs, Lehman Brothers, Microsoft, Compaq, and on and on. The systems they developed and maintained were expected to run 24/7, produce bucketloads of cash for Houston and provide solutions that would allow the traders to dominate any market they turned their attention to. Those markets include power trading, gas and metal trading, online bandwidth trading and even weather trading. If there was a way of selling something, anything, en masse, no matter how obscure, Enron would figure out how to do it and bring in the people needed to make it happen.

The nine months I spent working at Enron were probably the most exciting, intense, nerve-racking and emotional of my entire life. The company insisted that everyone fulfill their potential and use that potential to direct the company. Enron Online, the company's much-touted and massively successful online trading system, was the brainchild of one employee in Houston who gathered around her a collection of programmers to secretly develop the system after hours. Like eager puppies, they presented their finished product to the paymasters, who patted them on their backs, put the system live and transformed the company yet again.

The principle was that anyone at Enron could make a difference. Years before, Andrew Fastow, the former finance director of the company, had even openly touted a new accounting approach he was planning to use as an example of the company's innovative edge. The device, known as "off-balance-sheet financing," was the one that would eventually untangle Enron's web of internal secrecy with catastrophic results.

The company's motto, "Learn the power of why," forced everyone to question what they were doing and why they were doing it. Innovation was king. It was only a partial joke among the staff in London that the motto displayed on the huge multiscreen video in reception should instead be "Resistance is futile."

Enron made no secret of its hire-and-fire methods. From the day you sat down in your technology-filled cube, you knew the rule was "one mistake and you're out." It was that simple. You spent every single moment of every single day fully aware that one wrong word, one stupid bug in your code would mean the difference between employment and a life of daytime soap operas. The strategy worked: Those who had stayed in the company for any length of time were treated with admiration and utmost respect by us newcomers. Dismissal was usually a very public and extremely rapid affair that happened almost weekly, and the company's underground gossip grapevine drove home to those remaining just how lucky they were to still be there.

The share price had started to drop slowly from March 2001, the month I joined. I didn't take it personally. But everyone at Enron used the share price as a constant reminder of just how well, or not, the company was doing. I spent nine months in a department with permanent staff whose retirement funds, stock options and bonuses depended on that share price; and any time you walked by someone's desk, you'd see a ticker on their monitor. On the trading floor, stock tickers -- along with live Bloomberg and Reuters TV shows -- were displayed on huge plasma screens for all to see.

We were told weekly, in conference phone messages sent to everyone, that the company was doing great. Ken Lay told us that Enron's goal was to become the No. 1 company in the world, and he appeared completely serious. A department was even set up in Houston to document what Ken Lay was certain would be a pivotal period in global corporate history. The representative who came to London told us that Enron was working with book publishers and fully intended to release a stack of books chronicling the company's drama and its key players. This was the Roman Empire, and Enron wanted history to record it accurately -- albeit with a slight internal bias.

Then it all went wrong. They say that you learn most about a person's personality when he is under pressure; the same holds true for a company.

Everyone's desk had at least two computers. One would be used for your day-to-day work (in our case, writing trading systems). The other would be used for e-mail and other incidental activities, such as watching financial television. Everyone had access to live Bloomberg, Reuters and Sky Television feeds on their desktop -- not the crippled, postage-stamp-size Internet feeds we had at home, but full-screen, high-quality live television feeds. These also broadcast the monthly message of hope from our esteemed leaders, but they were most often used for whiling away the odd half-hour finding out what the world outside was doing -- or at the very least just checking that the world outside still existed.

On Sept. 11, we all were watching.

A ripple went around the office that a Cessna light aircraft had accidentally crashed into one of the twin towers in New York. Most of us had friends, colleagues or at least acquaintances who worked there. Then someone yelled out a news story that had come over the Reuters news feed saying it was a passenger jet, not a Cessna. That couldn't be right. We watched as the smoke billowed into the sky. A few minutes later, the entire company watched live as a second passenger jet slammed into the second building.

Enron didn't make much money that day. None of us lived up to what Ken expected of us. Around the office, tears started to flow. Were our friends safe? Who did this? The Enron "why?" took on new meaning.

On the floor, normally boisterous, domineering and somewhat scary traders had been reduced to ashen-faced wisps of their former selves. We heard nothing from Houston, so our European directors intervened and sent everyone home.

Over the next few days, the e-mail pep talks started to fly, led by Ken Lay. It was a trying time for everyone, but Ken insisted that we had to get through it and get back to work -- we had to keep pushing the company forward. He would not have liked the response most people gave.

October brought with it a second blow. The share price really started to slump; a new IT director was appointed, and like any good new Caesar, he asserted his authority by wiping out a third of his staff. The news was that the Sept. 11 attacks would have an impact on Enron, and although Enron was safe right now, head count had to be reduced -- a leaner company could better handle any downturn in business. We spent two weeks worrying who would go and who would stay.

The company offered a great package on the surface. You could go to an internal Web site and sign up for voluntary redundancy; in return your package would be generous, far more than the company would legally have to give. You could sign up speculatively, and if the company really valued you, you would be turned down. Many people signed up. Friday farewell drinks became a tradition throughout the end of October and into November. At the end of it, though, Ken Lay told us that we were now leaner and fantastically well positioned to attack the future.

Throughout this time, the share price continued to slump. Management in Houston ordered the various offices to turn their tickers off so as not to distract the staff. We wrote the trading systems in the first place, so we had no problem writing our own stock tickers and distributing them widely and quietly. It's quite something when the manager to whom you report thanks you, with a huge smile, for providing him with a piece of software that his superiors have banned.

Ken Lay's phone messages came thick and fast: Ignore the press. Don't listen to the analysts. We are fine. Everything is fine.

The stock price continued to slump, and the output of the most dedicated workaholics in London started to follow it down. The Dynegy merger was the big news now. Rumors that Enron was unable to meet payroll were quashed instantly. Once again we were in great shape -- the continuing slump in share price was nothing to be alarmed by, it was just a natural reaction to the merger talks.

Then we heard about the junk threat. Enron's stock price was approaching an all-time low, and if it reached a certain point, the company's credit rating would be downgraded to junk. In Enron's case, a junk status would force the company to pay back billions of dollars worth of loans, instantly. Some of Enron's counterparts started to refuse to deal with the company, but Ken Lay assured us everything was fine: New credit lines had been secured, and the debt that was to become due as a result of our downgrading to just above junk status was easily payable.

In the IT department, we could monitor the level of trading over the trading networks. Where once we had been fighting day and night to optimize those networks to cope with huge data flows, what we now saw resembled an interstate highway at 3 a.m. on a Sunday morning. As we went into December, hardly anyone was working. The home-brewed stock tickers were working flat out, as were the company's Internet connections, as thousands of employees scoured the Internet for the news stories we had been told to ignore.

The moment your company's credit is declared worthless is a very anti-climactic one. With a company the size of Enron you half expect something dramatic to happen -- that the huge plasma screens would explode, people would suddenly get angry and start fighting, then Michael Douglas would emerge from the elevator with a gaggle of lawyers and a last-minute rescue plan, just like in the movies. Of course that's not what happens. What did happen was that we all realized just what Enron was like.

We had all been focused on the stock price, but more serious things had already happened. The day Enron's credit rating fell to "junk" we all slowly walked around the office and informed our colleagues of what had happened. Many were in meetings, so as they came out of the meetings someone would tell them. Everyone was very quiet.

Upstairs, a more serious drama was already reaching its fateful conclusion. Houston was supposed to transfer trading funds to London each week; that week it had not. The week of the downgrading, Enron London had absolutely no funds to trade and plans were already being drawn up to go to the High Court and file for insolvency. But we didn't know that. We waited for the phone message from Ken Lay to tell us the company was fine.

The next day, outside the offices, the news crews appeared. A correspondent approached me to ask how I felt about the company filing for insolvency in England. He was shocked when my colleagues and I responded with blank confusion. The BBC told us that Price Waterhouse Coopers had been appointed administrator.

With morbid eagerness we ran upstairs and told our colleagues and bosses. They were as shocked as we were; Houston had said nothing.

That's when we finally understood that the end was inevitable. Tears flowed once again, even as line managers said that everything would be fine: Payroll would be met and, legally, the company had to pay redundancy (a British form of unemployment compensation), didn't it? Most of the permanent staff members had already lost five- or six-figure sums when the stock went through the floor, so it was some consolation to know that they were going to be paid.

The administrators called a meeting at lunchtime that day and told us the situation: They would do all they could to find value in the business; some layoffs would be inevitable (some layoffs, just some); they would do all they could to save the company. We were also told to expect another meeting at noon the next day to hear what the plan was.

The next day was somber; the normally bustling offices were quiet and sullen. Small groups of close friends and colleagues huddled around, debating what was happening. Somehow it had become clear that redundancy would not be paid; there was also now some doubt over the payroll. Some of the best financial and technology minds in the world were reduced to consoling each other, their lives on the brink of devastation two weeks before Christmas. One programmer, a close friend, looked heartbroken: His wedding was set for two weeks later, followed by a dream honeymoon. All that was now in jeopardy, because of the double-dealing of some bigwigs in a different country who had already realized millions through sales of stock based on the success of his work.

Noon came with no news other than that the meeting was being pushed back to 1 o'clock. One o'clock passed with no news. The film crews outside badgered us for what we knew; they truly didn't believe we knew nothing and couldn't comprehend that Houston had still said nothing.

Two o'clock, then 3 came along, with still no meeting. We had an informal meeting at that point and decided we knew the outcome. I asked the boss, "In your opinion, do we still have jobs?" He looked almost tearful but tried to force a smile, and replied, "In my opinion, you don't -- go home."

A group of us did just that. We packed up what we could and walked sullenly out. The traders had decided the same thing, ripping their trading desk signs down from the wall in order to pose smiling with them in front of the film crews. The film crews interviewed us as we left, and another close colleague provided the ghoul of modern broadcast media with that which it craved; tears, despair, hopelessness. Like every other permanent employee in London, she was facing a life with no redundancy pay (the salaries had indeed been met the day before) and a bill for her travel tickets as well as for the home computer Enron had provided her with. The staff lost their pensions, their bonuses, the stock, their jobs, their hopes and dreams.

The teams at Enron were the best in the world: They worked like there was no tomorrow, they bonded through some incredibly traumatic times and they strove at all times to add value to a company that they truly believed in. That company valued them so highly that most found out they were jobless on the 9 o'clock broadcast news.

Today I hear that the office is almost deserted. There is a skeleton crew there who work with the administrators to close down the business and act as salesmen for those parts that can be sold. My mobile phone still rings occasionally, when someone calls the phone on my old desk that I forgot to redirect on my last day. It's an eerie feeling to get a phone call where the caller I.D. says "Pete -- Enron." That person is dead and buried now.

I sit at my desk at home now. A stress ball with Enron's name on it peers at me from behind my monitor. Just one word of the corporate motto is visible: "Why."

By Peter Wright

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