The bankruptcy of Enron (2001) was nearly two decades ago. Jeffrey Skilling, the McKinsey-alum-Harvard-MBA- former CFO, was released from prison after 12 long years. He was convicted of fraud, conspiracy, and insider trading. The last one means that he was selling off his stock even as he knew of the company’s imminent collapse.
One of the ironies of it all, as reported in today’s Wall Street Journal, is that many of the hard assets of Enron that were sold off as part of its liquidation have really produced, literally and figuratively. Enron’s drilling and exploration company was a pioneer in the technology for fracking — the use of those assets spawned EOG Resources. One of the officers who wisely got out of Enron before the fraud started, Richard Kinder, founded Kinder Morgan,now a company with a network of pipelines across most of the West. GE bought Enron’s wind-power assets and this strategic buy appears to one of the few things GE touched that did not fail.
All of this success of Enron’s lost talent and sold assets highlights a root cause of Enron’s collapse. If the company had stuck to what it and its founder, Ken Lay (now deceased), knew best, it would have been an energy giant today. It was the foray into derivatives and off-the-book entities and just generally mumbo-jumbo finance wizardry that brought about the company’s collapse. Unnecessary risk, wheeling and dealing, investments in and sales of barges, and a host of other highfalutin financial tricks of the trade were self-destructive. Enron execs were shooting for the status of #1 in the world. They should have stuck with the more modest and achievable and sustainable goal of #1 in energy. Of all the words of tongue and pen, the saddest are these, “It might have been.” Here’s to a wiser and prudent life to Mr. Skilling now that he has paid his debt to society.