Cover image for 24 days : how two Wall Street Journal reporters uncovered the lies that destroyed faith in corporate America
24 days : how two Wall Street Journal reporters uncovered the lies that destroyed faith in corporate America
Smith, Rebecca.
Personal Author:
First edition.
Publication Information:
New York : HarperBusiness, [2003]

Physical Description:
xv, 400 pages : illustrations ; 24 cm
General Note:
Includes index.
Corporate Subject:
Added Uniform Title:
Wall Street journal.
Format :


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Material Type
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Item Holds
HD9502.U54 .E57927 2003 Adult Non-Fiction Central Closed Stacks
HD9502.U54 .E57927 2003 Adult Non-Fiction Non-Fiction Area

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This is the story of Rebecca Smith and John R. Emshwiller, the two reporters who led the Wall Street Journal's reporting on Enron and uncovered the unorthodox partnerships at the heart of the scandal through skill, luck, and relentless determination.

It all started in August 2001when Emshwiller was assigned to write a supposedly simple article on the unexpected resignation of Enron CEO Jeff Skilling. During his research, Emshwiller uncovered a buried reference to an off-balance-sheet partnership called LJM. Little did he know, this was the start of a fast and furious ride through the remarkable downfall of a once highly-prized company.

Written in an intense, fast paced narrative style, 24 Days tells the gripping story of the colossal collapse of what would become the world's most notorious corporation. The reader follows along as Smith and Emshwiller continue to uncover new partnerships and self-dealing among the highest levels of Enron's management. As they publish articles detailing their findings in the Journal, Wall Street and individual investors have a crisis of confidence and start selling Enron stock at unprecedented levels of volume. In the end - 24 short days later - Enron had completely collapsed, erasing 16 years of growth and losing $19 billion in market value while watching the stock drop from $33.84 to $8.41. Not only was the company destroyed, but investors and retired employees were completely wiped out-all the while Enron executives were collecting millions of dollars.

Climaxing with this 24-day period, this book shows the reporter's-eye view of a David-and-Goliath battle between journalists and a giant corporation. Each day a new story uncovered another fact; each day the company issued denials. And when the investigative stories reached critical mass and momentum, the stock market cast its final vote of no confidence. In the tradition of Indecent Exposure and Barbarians at the Gate, two other gripping narratives that began as a series of Wall Street Journal stories and ended up as books that defined an era, 24 Days brings the importance of great investigative journalism to life.

Author Notes

Rebecca Smith is a national energy reporter in the LosAngeles bureau of the Wall Street Journal. In 2001 she won the Gerald Loeb Award for beat reporting for her energy coverage
John R. Emshwiller, a senior national correspondent for the Wall Street Journal, has spent most of the past decade covering white-collar crime and related issues



24 Days How Two Wall Street Journal Reporters Uncovered the Lies that Destroyed Faith in Corporate America Chapter One "Our CEO Is Resigning." Some days, the newspaper gods refuse to smile. The keyboard won't cough up coherent sentences. A crucial source doesn't call back. The wall clock, warning of approaching deadlines, seems to be running a time zone too fast. Within minutes of getting that call on the morning of August 14, 2001, Jonathan Friedland, The Wall Street Journal 's Los Angeles bureau chief, suspected it was going to be one of those days. The caller was Mark Palmer, the public relations chief for Enron Corp., the Houston-based energy giant that the Journal covered out of its Los Angeles office. Normally, Palmer's call would have gone to the paper's national energy reporter, Rebecca Smith, or her de facto backup on the beat, John Emshwiller. But Smith was on vacation and Emshwiller was out of town on a story. The PR man got right to the point. "Jeff Skilling, our CEO, is resigning," Palmer said. "Ken Lay is going to step up and assume the president and CEO duties." You're kidding me, Friedland replied. He couldn't believe what he was hearing. "No," said Palmer. "There'll be a press release in about an hour." There would also be a conference call with Lay and Skilling for the press and stock analysts at about 12:30 P.M. Los Angeles time. "Why's Skilling quitting?" asked Friedland, still trying to absorb the news. He knew that Skilling had been Enron's golden boy for more than a decade and had just gotten the chief executive's job a few months earlier. It was unthinkable that he would quit so abruptly. "Purely personal reasons," said Palmer. "The board didn't ask him to resign, nor did Ken Lay. It's got nothing to do with Enron or its future. He'll elaborate on the call." With that, Palmer said a hurried good-bye. Friedland sat back in his chair in his cluttered corner office, his face furrowed in concentration. After more than twenty years as a journalist, the last ten with the Journal , he'd handled many big, unexpected announcements from companies, but this was Enron, one of America's premier companies, talked about in the same breath as General Electric and Microsoft and IBM. In a decade and a half, it had transformed itself from a sleepy natural gas pipeline company to a trading colossus with products ranging from gas and electricity to space on the information superhighway and insurance against inclement weather. In 2000, Enron's revenues had topped $100 billion, earning it seventh place on Fortune magazine's widely followed list of five hundred largest companies. Revenues for 2001 were on course to hit nearly $200 billion, an astonishing growth rate for a company of that size. Enron's management team -- headed by its chairman, Kenneth Lay, who had been chief executive for fifteen years before Skilling took the helm -- was one of the best. Skilling was only in his late forties. Everybody expected him to be running Enron for years. Instead, he'd barely gotten the seat warm. And what was this about "purely personal reasons"? Enron's explanation sounded implausible. In Friedland's experience, almost nothing was more important to a corporate chief than staying at the top once he'd gotten there. Maybe Skilling has some fatal disease he doesn't want to talk about, Friedland thought. Or, the bureau chief wondered with a pang of professional worry, is something going on inside of Enron that we should know about and don't? Even as Friedland mulled over the mystery, he knew he wasn't the person to solve it. Silently he cursed the rotten timing of the announcement. Why did Smith have to be on vacation this week? Ironically, his energy reporter had been trying to schedule time off for most of the summer, but work had been too hectic. Working out of the Los Angeles bureau, the forty-six-year-old Smith had been covering Enron and about twenty other large energy companies for two years. She had moved to Los Angeles to take the Journal job, but she was eager to move back to the San Francisco area, where she'd lived for fourteen years. The Bay Area was her home; she had worked for the Oakland Tribune , San Jose Mercury News , and San Francisco Chronicle before joining the Journal in September 1999. She had another reason for wanting to move back north. She was divorced, and when she took the Journal job, she promised her ex-husband and her children, at the time ages eight and eleven, that they would treat the L.A. assignment as a tour of duty. At the earliest time possible, she'd get herself and the children back to the Bay Area. Friedland called Smith on her cell phone and gave her a quick rundown of what had happened. "Can you think of any reason why Skilling would quit?" he asked. As it happened, the call caught Smith on moving day, in an empty upstairs bedroom of her Bay Area home. She had been up since before daylight -- mopping floors and vacuuming empty rooms. Her first thought when Friedland called was, an exasperated, Can't I ever get away from work! As she talked with Friedland, she suddenly had the sinking realization that she might be expected to write a story on the Skilling departure while sitting on the hardwood floor with her company-issued laptop literally in her lap. She winced as she imagined the worst-case scenario: By the time she finished, every piece of furniture and heavy box would be in the wrong room, the "strong backs" would be gone, and a carefully orchestrated move -- that allowed nine days for packing everything, getting it all north, and unpacking more than two hundred boxes -- would be in shambles. Skilling couldn't have chosen a lousier moment to resign. Normally, Emshwiller would have been ready to pitch in ... 24 Days How Two Wall Street Journal Reporters Uncovered the Lies that Destroyed Faith in Corporate America . Copyright © by Rebecca Smith. Reprinted by permission of HarperCollins Publishers, Inc. All rights reserved. Available now wherever books are sold. Excerpted from 24 Days: How Two Wall Street Journal Reporters Uncovered the Lies That Destroyed Faith in Corporate America by John R. Emshwiller, Rebecca Smith All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.

Table of Contents

Acknowledgementsp. xi
Prologuep. xiii
Part 1 Red Sky Warning
1 "Our CEO Is Resigning."p. 3
2 "Who's Andy Fastow?"p. 12
3 "You Won't Believe What Skilling Just Told Me."p. 22
4 "I Have Found That Mr. Lay Doesn't Take Kindly to Criticism."p. 31
5 "It Isn't a Contlict of Interest."p. 42
6 "You're Just Scratching the Surface."p. 47
7 "You Are About to Topple a $20B House of Cards."p. 57
8 "I Want to Be CFO of the Year."p. 67
9 "It's Okay to Have a Conflict."p. 76
10 "Make the Journal Go Away."p. 83
11 "He Would Have Done Nothing to Harm Enron."p. 89
12 "Amend My Last Statement."p. 94
Part 2 The 24 Days
13 "I'm Not Sure It Had a Name."p. 104
14 "You Missed Something That Could Be Really Big."p. 119
15 "Looks Like the SEC Read Your Stories."p. 134
16 "There Is an Appearance That You Are Hiding Something."p. 142
17 "I Must Have Heard the Term Death Spiral a Dozen Times Today."p. 156
18 "Oh, I Expect to Be in the Office All Weekend."p. 172
19 "Those Liars!"p. 183
Part 3 The Party's Over
20 "Does Ken Lay Know About This Meeting?"p. 193
21 "Don't Approach Their People Again."p. 210
22 "At Least We're Going to Be Part of the Biggest Bankruptcy Ever!"p. 220
23 ""p. 228
Part 4 Aftershocks and Revelations
24 "There Will Be Something Else Fun and Exciting on the Other Side."p. 241
25 "Enron Has a Problem You May Want to Write About."p. 258
26 "I Really Got Sucked into This One."p. 271
27 "We Notified Enron's Audit Committee of Possible Illegal Acts Within the Company."p. 278
28 "Do You Guys Have a Shredder Here?"p. 286
29 "I Didn't Look Closely. I Didn't Want to Know Too Much."p. 296
30 "You've Got to Be Kidding Me."p. 306
31 "I Feel I Just Can't Go On."p. 313
32 "There Was a Young Turk Arrogance."p. 329
33 "Next Time Fastow Is Going to Run a Racket, I Want to Be Part of It."p. 341
34 "Often He Was Just Goofy."p. 345
Part 5 The Perp Walk
35 "The Arrogance. The Lack of Accountability."p. 353
36 "Enron's CFO, Kopper, and Others Devised a Scheme to Defraud Enron and Its Shareholders."p. 363
37 "Americans Only Learn from Catastrophe and Not Experience."p. 373
Indexp. 383