In July 1985, Enron was formed from the merger of Houston
Natural Gas and InterNorth of Omaha, Nebraska, two gas
pipeline companies that made a boring but steady income from
transporting natural gas from the wells to the consumers.
Over the next 16 years, Enron transformed itself and grew,
becoming a prestigious, aggressive growth company.
Just over a year ago, it was among the largest and most
admired companies in America. Its revenues the previous year
had been $101 billion. It employed 19,000 people worldwide
and it enjoyed power and prestige as a result of its success.
It was worth $70,000,000,000 in the stock market and seemed a
rock-solid investment that was poised for growth.
It was known as a generous company in many ways. The sports
stadium in Houston, its hometown, is named Enron Field. It
and its officers were patrons of many charitable causes. Not
the least recipient of its beneficence was the American
political system: politicians of all sorts received sizable
donations from the company and its top brass.
From this peak, the company plummeted to a point where it is
almost hard to remember how proud and mighty it was just less
than a year ago.
On August 14, 2001, Jeffrey Skilling, CEO and president of
Enron, suddenly resigned for "personal reasons" after just
about six months on the job. On August 22, Sherron Watkins, a
vice-president of the company with an accounting background,
submitted a detailed memo outlining serious problems she saw
in Enron's accounting.
On Oct. 16, Enron revealed that it had lost $618m in the 3rd
quarter. Also they took $1.2b in one-time charges, reducing
the value of the company. On November 8 Enron admitted that
its income for the past four years was overstated by $600
On December 2, Enron filed for bankruptcy.
A committee appointed by its board of directors to study what
happened concluded that a key part of its business failed
because of "a flawed idea, self-enrichment by employees,
inadequately designed controls, poor implementation,
inattentive oversight, simple (and not-so-simple) accounting
mistakes, and overreaching in a culture that appears to have
encouraged pushing the limits."
A company that seemed to be a great American success story
and on its way to the top fell, in just about three stunning
months, to become an ignoble wreck.
Now there is a tremendous amount of attention in the United
States focused on the debacle. It aims at finding out exactly
what happened, who is to blame, and taking steps to make sure
that nothing similar happens again.
Our interest is different. We are impressed again by the
swiftness of the fall and the contrast. Truly the company
fell from a high peak to a deep pit (Chagigah 5b).
From an example of success it has become a lesson in hubris
and greed and failure -- and perhaps fraud. Where it seemed
to be a champion of free markets, it has been exposed as a
practitioner of the worst kind of abuse of those markets.
Where politicians eagerly sought to be in its good graces,
they are now embarrassed by all past contact with it.
We must take it as a lesson that appearances do not always
reflect the underlying reality, that those who appear
strongest may be swiftly brought down, and most importantly
that just as the mighty can fall suddenly, so is yeshu'as
Hashem keherref ayin, and we should await Moshiach
Tzidkeinu daily, no matter how bleak things seem.