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ROBERT BRYCE. Pipe Dreams: Greed, Ego, and the Death of Enron. New York: Public Affairs 2002. 394 pages. $27.50.
What more appropriate book to review in an issue on professional ethics than the story of the corruption and downfall of Enron? In Pipe Dreams, Robert Bryce traces the history of a modest company that became an energy-trading giant, and then in a series of acts of hubris by its executive officers, overreached itself and went bankrupt, thereby ruining the lives and retirement nest-eggs of thousands of loyal employees. Bryce, an investigative reporter who has worked for such Texas newspapers as the Austin Chronicle and the Texas Observer, interviewed more than two hundred people and employed more than 1,800 print sources in gathering information for this book.
Bryce's essential thesis is that Enron went bankrupt "because its leadership was morally, ethically, and financially corrupt" (12). Bryce details how Enron's downfall began when CEO Ken Lay and Chief Operating Officer (COO) Rich Kinder allowed Jeff Skilling (later to succeed Kinder as COO) to talk them into changing their accounting method from cost accounting to mark-to-market accounting. Bryce defines the two systems as follows:
For example, assume Enron was a Venetian company that had signed a contract to sell another company one boat each year for ten years, with each boat costing $100. Under [cost accounting] rules, Enron would have only been able to record the $100 debit (and credit) for the sale once each year.
But under mark-to-market accounting, Enron could estimate...