January 29, 2002
Enron lived 'on edge - sex, money, all of it' 
The rise and fall of Houston decadence
Philip Delves Broughton 
The Daily Telegraph, with files from news services 
HOUSTON - Enron was a company in love with itself. Office affairs were rampant, divorce among senior executives an epidemic and stories of couples steaming up glass-walled offices after late-night meetings were the talk of Houston.
"It was insane," says a former energy trader, soothing her financial injuries with a margarita.
"There were no rules for people, even in our personal lives. Everything was about the company and everything was supposed to be on the edge -- sex, money, all of it."
The music has suddenly stopped. The startling demise of the energy giant has wiped out savings and pensions, destroyed careers and dragged the U.S. version of free-market capitalism into the interrogation room.
The reverberations of Enron's collapse will be felt for years in Washington and on Wall Street, but nowhere more than in Houston, the stage for Enron's gaudy act. From the mid-1980s, when Enron was created by the merger of two energy companies, Houston became its town. The company filled the void left by the oil companies, whose buccaneering days had ended with the collapse in oil prices.
In River Oaks, the most exclusive suburb of Houston, Enron executives began building huge mansions. Jeff Skilling, the executive who transformed Enron under the more genteel rule of Ken Lay, the former chief executive, decorated his house in black and white, Enron's corporate colours, from the marble to the sofas to the flowers, wallpaper and pictures.
The Enron wives became known around town for their Mercedes, fur-trimmed sweaters and leather pants.
But in the excitement, Enron lost touch with its mortality, not to mention morality. Mr. Skilling wanted it to become an alternative to the Wall Street banks.
He wanted to recruit the best, which meant persuading the leading business school graduates from places such as Harvard, his alma mater, and Stanford to choose Houston over New York or Silicon Valley.
He did so by creating the same culture of unselfconscious greed and reward that Wall Street was forced to suppress by the insider-trading scandals of the late 1980s. He built his own Bonfire of the Vanities in Houston and everyone wanted to feel its warmth.
Among the perks were the in-house health club and doctor's office, as well as laundry and car-washing services. Broadband traders were issued hand-held computers and wireless laptops, and frequently went on junkets to the Bahamas or hunting weekends in Mexico. Others accompanied Mr. Skilling to hike glaciers in Patagonia or race Land Cruisers in Australia.
One employee described how he got a 10% discount in a tony men's clothing store by mentioning he worked for Enron. Elsewhere in town, nightclubs waived cover charges for Enron employees.
But the work culture that employed these carrots was brutal.
Managers employed a system known as "rank or yank," with semi-annual reviews in which every employee's performance was ranked one to five. As the names flashed on a projector, the bosses graded them. The bottom 15% of workers were fired each year.
The pay was not particularly high -- trainees started at US$35,000, The Wall Street Journal reported. But they could double that when bonuses were added. Bonus day was known as Car Day, because of the line of expensive sports cars that arrived for the most successful employees -- US$100,000 Porsches were the vehicle of choice.
To the outside world, Enron described itself as a family for which employees were delighted to work punishing hours. Inside it became increasingly incestuous, sexually and financially.
Only those at the top and the traders who saw the kinds of wild bets Enron was placing, on everything from oil to the weather, saw how precarious the whole thing was. They began pulling out as much money as they could.
The best brains began demanding vast salaries to stay and, to save face, Mr. Skilling paid them. Then they asked for more. Senior executives began selling their shares in huge blocks. Everyone at the top was cashing out, while those further down believed the hype.
"We all thrived on the buzz," said Mark Lindquist, 39, a Web designer who lost his US$75,000-a-year job and is struggling to pay for his autistic son's treatment. "It seemed like we were part of something incredible."
He was one of the 4,500 let go after the company fell into bankruptcy on Dec. 2.
Now, not only the rank-and-file are hurting. Yesterday, Mrs. Lay said her family also lost its fortune.
In an interview with NBC's Today show taped over the weekend at her home in Houston, Linda Lay defended her husband as a decent, moral person who, like many thousands of others linked to Enron, was fighting personal bankruptcy.
"Other than the home we live in, everything else is for sale," she said. "We are fighting for liquidity."