Enron Schemes Reflect Culture, Report’s Author Says

A year after giving federal investigators a road map of financial scheming that fueled Enron Corp.’s failure, the main author of the so-called Powers Report says he still doesn’t understand why anyone at the company thought the schemes would work.

“This is a cultural issue as much as an accounting issue,” said William Powers Jr., the University of Texas law school dean who investigated the company’s demise. “This is a matter of corporate character and virtue.”

Powers, 56, joined Enron’s board Oct. 31, 2001, two weeks after the energy giant acknowledged massive losses. By December 2001 Enron filed for bankruptcy and was synonymous with corporate malfeasance.

Powers probed conflicts of interest in transactions between the company and murky partnerships that hid debt, inflated profits and channeled millions of dollars into the pockets of former Enron Chief Financial Officer Andrew Fastow and others. Fastow ran the partnerships.

It turned into an accounting probe with Powers heading a team of 19 lawyers and 13 accountants.

In three months, the committee produced a report that blistered the greedy architects of the partnerships as well as executives, directors and auditors who failed to keep an eye on them.

“I have to remind myself I did this,” Powers told Associated Press on Saturday in his first interview about his role at Enron since leaving the company last February. “It’s easy to think that was a different world.”

But the Powers Report didn’t fade away.

Details revealed in the report about so-called Friends of Enron, who allegedly skimmed millions of dollars at the expense of shareholders, reappeared in a federal criminal complaint filed months later against Michael Kopper, Fastow’s onetime top lieutenant, and in the 78-count indictment against Fastow.

This week, prosecutors are expected to file more charges against Fastow. He has pleaded innocent.

Powers “certainly gave Enron a pretty good glimpse of what was coming and who might be at risk,” said Robert Rigg, head of the criminal defense program at Drake University.

Powers, who spoke Saturday at a business ethics symposium at the University of Texas, said Enron’s directors, including former Chairman and Chief Executive Kenneth L. Lay, cooperated.

Powers testified twice before Congress and then returned to academia as an Enron spectator.

“We were trying to do our best to provide as accurate a picture from the start as we could,” he said.