Enron Corp. - University of California | Office of The President

that a writedown had to be taken because so many proposals were no longer even arguably viable.
But this ran counter to corporate directives. Causey, at Skilling's direction, routinely responded
that "corporate didn't have room" to take a write-off because doing so would bring Enron's
earnings below expectations. By 97, years past when start-up and proposal costs should have been
written off, Enron had deferred a $100-million "snowball" on some 75 projects, including those
in Central and South America and the Dabhol power plant in India, while the cash-burn rate –
virtually all deferred – dwarfed the revenue return.
(g) It was impossible for EES to enter into contracts that extended beyond three
years and accurately forecast energy costs or savings because of the variables related to these
contracts. Enron misused these variables in long-term contracts to manipulate its assumptions –
"moving the curve" to create higher values and thus record higher revenues using mark-to-market
accounting.
(h) The $2.8 billion Wessex Water purchase and the establishment of Enron's
international water business were not the result of careful analysis but rather were arranged to settle
a dispute between two top Enron executives, Skilling and Mark-Jusbasche, who had a years-long and
extraordinarily bitter struggle to be designated to succeed Lay as Enron's CEO. Skilling prevailed,
and Mark-Jusbasche was in effect "paid off" and given the opportunity to fulfill her ambition to be
CEO of a public company, which would follow with Azurix's 99 IPO. This was also done to silence
Mark-Jusbasche, who possessed extraordinarily dangerous and damaging information about the
wrongdoing that had gone on at Enron. In truth, Enron grossly overpaid for Wessex Water –
hundreds of millions of dollars more than the company was really worth. The business would hurt,
not help, Enron's earnings, would result in a later writedown of that overvalued asset, and would not
become a $20 billion business in five years. Enron created the purported worldwide-water business
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