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

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I firmly believe that the probability of discovery significantly increased with
Skilling's shocking departure. Too many people are looking for a smoking gun.
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3. There is a veil of secrecy around LJM and Raptor. Employees question
our accounting propriety consistently and constantly....
a. Jeff McMahon was highly vexed over the inherent conflicts of LJM.
He complained mightily to Jeff Skilling .... 3 days later, Skilling
offered him the CEO spot at Enron Industrial Markets ....
b. Cliff Baxter complained mightily to Skilling and all who would
listen about the inappropriateness of our transactions with LJM.
c. I have heard one manager level employee ... say "I know it would be
devastating to all of us, but I wish we would get caught. We're such
a crooked company."... Many similar comments are made when
you ask about these deals....
(b) A second employee wrote:
One can only surmise that the removal of Jeff Skilling was an action taken by
the board to correct the wrong doings of the various management teams at Enron.
However ... I'm sure the board has only scratched the surface of the impending
problems that plague Enron at the moment. (i.e., EES's ... hiding losses/SEC
violations ... lack of product, etc.).
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[I]t became obvious that EES had been doing deals for 2 years and was losing money
on almost all the deals they had booked. (JC Penney being a $60MM loss alone, then
Safeway, Albertson's, GAP, etc.). Some customers threatened to sue if EES didn't
close the deal with a loss (Simon Properties – $8MM loss day one).... Overnight the
product offerings evaporated.... Starwood is also mad since EES has not invested the
$45MM in equipment under the agreement.... Now you will loose [sic] at least
$45MM on the deal.... You should also check on the Safeway contract, Albertson's,
IBM and the California contracts that are being negotiated.... It will add up to over
$500MM that EES is losing and trying to hide in Wholesale. Rumor on the 7th floor
is that it is closer to $1 Billion....
This is when they decided to merge the EES risk group with Wholesale to
hide the $500MM in losses that EES was experiencing. But somehow EES, to
everyone's amazement, reported earnings for the 2nd quarter. According to FAS 131
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