February 2002
A huge confidence trick unravelled
Did Kenneth Lay's call of doom to Paul O'Neill contain a germ of
truth? The Enron chairman claimed in an October telephone
conversation with the US Treasury secretary that the collapse of
Enron could lead to a systemic decline in the US financial system.
It was easy to deride it at the time as the desperate ravings of a
man scrambling to save the company he and fellow executives had
crashed into the ground.
For a while the Enron saga unfolded as an extraordinary but
somehow remote and isolated event, rather like the collapse of
Argentina. Financial markets took the biggest ever bankruptcy in
America calmly. Neither credit nor equity markets sold off. But
now, three months on, it seems Lay had a point.
Enron's collapse has exposed serious shortcomings in pretty much
all aspects of US corporate and financial life. At how many other
corporations have executives colluded in cooking...
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