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Enron remains both a mystery and the icon that captures the collapse of
investor confidence in the accuracy of audits, accounts and company reporting.
These are important issues, but unfortunately Fox does not shed a great deal
of light on what happened, or how Enron was able to effectively deceive both
analysts and the wider public.
Fox shows how special purpose entities were created in as early as 1991 and
used as a means of playing shuffleboard with debit and borrowings. The shift
from a legal structure to a structure that broke accounting rules, created
massive conflicts of interest and which enriched a few selected Enron board
members at the expense of shareholders is noted, but not analysis in depth.
The key questions remain unanswered: Why didn’t auditors and analysts detect
these problems in the 10 years leading up to Enron’s collapse?
Fox details the faking of a new EES trading floor where 75 workers were pulled
from their current jobs so they could pose in a fake trading center for the
benefit of leading Wall Street analysts who were on tour of the headquarters.
Again, this begs the question: Why did these analysts fail to see through the
Just a few pages later, Fox details the ‘wash’ trades to boost the value of an
Enron division. The nature of the action is one cause for concern, but the
failure of accounting and audit practices to detect this is another.
The book is an interesting account of the company but it fails to deal with
the core issues of how so many people were able to get away with these
practices for so long. Auditing, accounting and the obligation to provide fair
and accurate reports to shareholders are not issues that are separate from the
rise and fall of Enron. However, this book does not address them in any
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