Tuesday, March 12, 2013

Book review: "24 Days"

They just didn't know when to stop.

I'm referring, on one hand, to the puppetmasters of one-time corporate giant Enron, whose greed pushed them to create one corrupt scheme after another until the whole house of cards came crashing down in 2001. But I'm also referring to the authors of "24 Days," who would have had a much better book had they stopped about halfway through.

For the first half of "24 Days," authors and Wall Street Journal reporters Rebecca Smith and John R. Emshwiller put together a tight journalistic whodunit recounting the final months of energy giant Enron. This is certainly not a book for everyone, but financial journalists and forensic accountants will appreciate the details of the reporters' relentless digging into company documents and dogged pursuit of the inside story.

Enron is a difficult topic for any writer because the company hid its shady financial schemes in unfathomably complex schemes in order to deter regulators, auditors, investors and journalists. Readers who attempt this book must prepare themselves for a trip into a tangle of accounting terms like "balance sheet management," "derivative instruments," and "share-settled options."

Still, given the territory, Smith and Emshwiller do an admirable job of engaging the reader as they work the phone and pore through documents for clues, battle with hostile sources and rush to meet deadlines.

The title, however, is a strange choice. The "24 days" supposedly refers to the amount of time it took for Enron to collapse, but in fact that was just steepest portion of the company's dive, a period when $19 billion of stock market value was lost. But Enron's stock had been dropping before that period, and it continued to drop after it, so 24 days is a rather arbitrary choice. And if you think the book covers only this 24-day period you're WAY off "24 Days" covers something closer to 24 months of history.

That's too bad. By page 190, the 24 days is over and Enron is essentially finished. At this point, Smith and Emshwiller should have offered a short epilogue summarizing subsequent events and ended the book. Instead they ramble on for another 200 pages emptying out their notebooks and recounting every conversation, interview and thought they ever had related to Enron. They include the life histories of Enron executives Kenneth Lay and Jeffrey Skilling, the involvement of accounting firm Arthur Andersen and consulting firm McKinsey & Co., and the tragic suicide of former Enron executive Clifford Baxter. There are interesting pieces here, but they are just jumbled together. Rather than having a taut tale of a company's death spiral, the book unravels into a mishmash of all things Enron.

One other gripe: At the start of the section detailing the collapse of Enron, they include a graphic that details key events to come. It's a nice way to give away the story.

As something of an aside, I wish the authors had stepped back from the weeds of the story to address why we should care. That is, Enron defenders would argue that everything was fine until reporters started poking around and "caused" the stock to fall. There is a good response for this Enron was doomed to crash sooner or later anyway and hurt investors. But I would have liked to hear the reporters explain why it was better for investors to lose their shirts sooner rather than later.


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