In The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron (Amazon,) Bethany McLean and Peter Elkind chronicle the rise and fall of Enron.
Before the sub-prime crisis and Lehman Brothers bankruptcy, Enron was the poster child of greed gone wild. No other company had ever committed such a massive accounting fraud. Enron’s published financial statements were completely divorced from its underlying business economics. And the system of checks and balances that were supposed to prevent such frauds were corrupted by conflicts of interest within the gatekeepers. Wall Street analysts did not dig too deep because Enron was a massive source of investment banking revenue, its auditor signed off on everything because accounting was a loss-leader for their much more lucrative consulting practice and neither Enron’s board of directors nor the rating agencies that rated its debt cared to peek under the hood.
The following passage from the book captures Enron’s mindset:
The after-the-fact rationalizations were strikingly similar to the mind-set that produced the Enron disaster in the first place. The arguments were narrow and rules-based, legalistic in the hairsplitting sense of the word. Some were even arguably true—in the way that Enron itself defined truth. The larger message was that the wealth and power enjoyed by those at the top of the heap in corporate America demand no sense of broader responsibility. To accept those arguments is to embrace the notion that ethical behavior requires nothing more than avoiding the explicitly illegal, that refusing to see the bad things happening in front of you makes you innocent, and that telling the truth is the same thing as making sure that no one can prove you lied.
Recommendation: worth a read.