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Internet | Reflections

October 30, 2006

Five Months With Enron

Five years ago, Grant Case started work at a hot-shot energy company. He had an insider's view as Enron circled the drain. Plus: Grant digs up old emails chronicling the meltdown.

Jenny Reisinger Cohen

On a recent Sunday night, my friend Grant Case sat in front of a pile of papers on a kitchen table—all he has left of his job at Enron. Grant started working in the energy company's information-technology office after being recruited out of Baylor University. Less than six months later, a voicemail left on his office phone told him his services would no longer be required.

Integrity poster
Grant (right) with Enron colleagues. He regrets not taking this poster with him when he packed his stuff on his final day in the office.
"It's kind of funny, because my Mom first thought something wasn't right with the company as soon as I took the job," he says. "She's an accountant and did some research on them. She didn't quite understand how they made money, and looking back, I probably didn't either."

Grant's first two weeks at Enron in July 2001 were spent in training, where he was lumped in with the new financial employees and analysts coming in from Harvard and Wharton, schools he expected to be represented in a place that prided itself on talent. "I never met a dumb person at Enron," Grant says. "From the lowliest administration assistant to the vice presidents I talked to, everyone was really smart. In the end, the company's collapse was just an institutional control issue."

Grant remembers his early days on the job as if he was working in a stereotypical dot-com venture in its heyday. He had a brand new computer in a clean, state-of-the-art workspace with a new Aeron chair. On his first day, he and some co-workers ended up drinking four pitchers of margaritas with their boss at lunch. Thursdays after work were usually reserved for drinks with co-workers. Everything was paid for by the company.

As Grant remembers it, he saw the best of Enron during the first two months he was there, and the worst of Enron during the last three. The turning point was late September, when the company's stock price dropped. On October 16, 2001, Enron reported a $1.2 billion reduction in the value of the shareholders' stake after news that Andrew Fastow, Enron's chief financial officer, had boosted profits by hiding the company's debt. "I started getting concerned when I started to see the stock price going down," Grant remembers. "To me, what was tougher was seeing it in the [Wall Street] Journal everyday. Another article would be out or something else would come up and we would say 'What the hell?' When I read the first Journal article, I knew exactly what it was and wondered why in the world we would ever do this." (Disclosure: I used to work as an editor for the Wall Street Journal Online.) After the first article ran, Ken Lay sent an email to the company that was, Grant recalls, "typical damage-control crap."

Things went downhill from there. Grant and his co-workers exchanged emails with the latest articles about Enron's mounting woes. Another big blow: Fastow's departure a week after the company's earning report. "We pretty much knew we were in a lot of trouble when Fastow left," Grant says.

As the end of November neared, employees recognized that the company was in meltdown mode, taking home items from their desks and backing up their emails nearly every day. Grant's boss had been offered a buyout that he didn't take, which ended up being a good idea, as those who took the buyout never saw the money they were promised.

Ken Lay cover
Chronicling Enron's Meltdown

Grant digs up emails marking down Enron's final months, including the cancellation of the holiday party and a reminder to retain documents.

On December 3, a Monday, Grant went into work sensing that day could be his last at Enron. It was. There was talk all weekend that Enron was going to declare bankruptcy. Chris Hanz, Grant's boss, came in early and told him and his co-workers that they were headed to the Enron trading floor. Security was tight and most employees weren't given access to the floor, but an exception was made for Grant and his IT colleagues because they supported the traders. Louise Kitchen, the founder and head of Enron Online, the company's internet trading division, came out on the floor to address the traders. "She said to the traders, 'We're going to be announcing layoffs today. Whatever you do, whatever you hear, make sure you come back to work tomorrow. Everyone in this room: Come back to work.' They were so scared of the traders leaving, because that was all they had at that point," Grant recalls. "We weren't supposed to be there to hear that. I knew at that point that we were screwed."

He went back to his office, taking his usual route through the company's human-resources department before he was stopped by security. "Security was severe, asking us what the hell we were doing there," Grant says. "They told us to just keep moving and not dawdle. They didn't want anyone to attack the HR people. When you're about to lay off 9,000 people, the chances of one person being upset were great." He started boxing up the stuff on his desk and cleaning off his computer's hard drive when Enron shut off its entire network—no internet, no access to email, nothing. Grant started grabbing things and throwing them in his box. "I pretty much knew that I wasn't going to set foot back in there, which is why I took everything I could," he says. They still hadn't been officially informed whether they had been laid off. That morning, one of Grant's colleagues had brought in vodka; by that point, he was already drunk.

business card
Grant's business card.
Enron had managers take their employees up to the IT's main floor, where they were told to go home and call in to their voice mailboxes later to find out if they should come to work the next day. "I was in a daze at that point," Grant recalls. "They essentially said go home, but you won't know if you should come back to work tomorrow." As he left, he remembers a sea of people walking out the doors with boxes in their hands; many had come prepared, bringing boxes or bags with them to work. Once Grant got outside, he saw news vans everywhere— more than had been there for to chronicle the company's woes over the past month—ready to cover the layoffs. Lawyers were passing out their business cards as people left, hoping to find a defendant to sue the energy company.

Grant coped by going home and drinking frozen strawberry daiquiris. Around 7 that night, he called in. "I heard the voice say, 'I'm very sorry, but we're going to have to let you go,' " he says. The voice belonged to Jeff Johnson, head of Enron's global markets information technology. "Everybody got the same voice mail. It wasn't personalized."

Baylor's annual report
Grant in front of Enron headquarters, in a picture taken for Baylor University's annual report, which mentioned his work at Enron. He received the report in the mail less than a month after being laid off.
Grant's contract with the company called for him to get $13,000 in severance in the event of a layoff. That changed when the company filed for bankruptcy. He had been saving up to buy his girlfriend an engagement ring, but her ring money went toward car payments and his rent instead. Looking back on his old records, Grant finds a note about a check he received from Enron for $4,500 on December 21, a check that everyone who worked at Enron had received because the company broke a state law by laying off more than 10% of its employees without giving at least 45 days' notice. More checks continued to come in, either for Enron's various infractions or as part of what could be found of Grant's severance package; in the end, he did received the promised $13,000, more or less.

Grant is now in his second year of business school at Indiana University and has a porch big enough for his huge grills to barbecue baby back ribs, burgers, and pork tenderloin. His girlfriend, Courtney, finally got the ring she was promised, and the couple just celebrated their third wedding anniversary. Their honeymoon was paid for with those checks. "We went to Fiji on Enron," Grant says, with a touch of sarcasm in his voice.

Related on the web

A chronology of Enron's demise from the Associated Press, and full coverage from the Guardian

Grant digs up emails marking down Enron's final months, including the cancellation of the holiday party and a reminder to retain documents.

November 5, 2001: Reminder to Vote on Election Day

Voting is a key tool in our governmental process, and allows every American to make their voice heard. We encourage you to exercise your right to vote tomorrow, November 6.

Grant says this was Enron's subtle way of reminding its employees about the importance of political policy for its work as an energy company.

November 16: Exchange Between Grant and a Potential Software Vendor

To: Case, Grant
Subject: DJ

Hi Grant,

Please let me know when you would like to reschedule.

Thanks,
Andy

gift certificate
Grant paid $125 to have dinner with the head of Enron Networks, a 600-person operation, as part of a charity auction, but Enron collapsed before Grant was able to schedule the dinner.
From: "Case, Grant" To: "Andy xxxxxxx"
Andy,

I'm not sure if you have seen the news the past three weeks, but Enron has been through a dire financial situation culminating with the merger between Dynegy a week ago. I do not believe we will be purchasing any products at this time. I'm sorry for the inconvenience.

Sincerely,
Grant Case

To: Case, Grant

Hi Grant,

I have seen the news, but business needs to keep moving & projects still need to be completed. Are you saying that your project has been delayed or deleted?

Also, it's been our experience when two companies merge there is a lot more integration needs!!

Incidentally, Dynegy uses our software.

Please keep us in mind.

Thanks,
Andy

November 19: From the Enron Office of the Chairman Announcing Future Layoffs

Over the past few weeks we have taken aggressive action to restore investor confidence, ensure liquidity, strengthen our balance sheet and reassure our customers. We have accomplished a great deal, but we still have more to do. Our long-term success will depend on where we focus our resources and how efficiently we operate in the near term. Consequently, we are reviewing each of our businesses to evaluate their prospects, near-term earnings and cash flow potential, fit into our overall strategy, and cost structure. The goal of this process is to focus our resources on those opportunities that will produce near-term cash and earnings and that form our core franchises going forward. The result will be a stronger and more efficient Enron.

We will be discontinuing some activities and some businesses. Regrettably, that will require reductions in our work force. We will make these decisions as quickly as possible and will continue to update you along the way. We will start next week by announcing the results of the first phase of our business review to all employees. Also beginning next week, management will be talking with you about how you might be affected.

In addition, we must begin preparing for the completion of our merger with Dynegy and the integration of our two organizations. Our goal is to put together the strongest possible combined organization: an organization with the best people, systems, and facilities. Not all of this needs to be accomplished immediately, but we do need to start the process early and steadily escalate this activity as closing approaches. Steve Kean, Enron executive vice president and chief of staff, will lead this transition effort for Enron. We will add additional resources to this effort as time goes on.

Thank you again for all of your work and dedication to Enron.

Ken Lay magazine cover
Kenneth Lay showed up on this Business 2.0 cover in 2002. Grant's former address is in the bottom left corner.
November 19: Ken Lay Announces Cancellation of Holiday Party
I know that this is a difficult time for all of us. With everything going on inside the company as well as in the world around us, we have been carefully considering whether a holiday celebration is appropriate this year. To be honest, employee feedback has been mixed. Many viewed the holiday party as a unique opportunity for us to come together as Enron employees to share the spirit of the season. Others felt a holiday party would be improper given the company's current circumstances.

After weighing these points of view, we have ultimately decided to cancel the all-Enron holiday party that was scheduled for December 8. Given what has transpired over the past month, it could be considered imprudent for Enron to incur the expense of such an event. I regret that this action is necessary because I recognize that your hard work throughout the year merits a holiday celebration and so much more. We will attempt to find other, more appropriate ways to recognize your outstanding contributions as we move into the holiday season.

Ken Lay

November 27: A Humorous Forward in the Gloom

The name Enron itself sounds like it has something to do with energy, but it means nothing. At the time the company was formed from the merger of InterNorth of Omaha and Houston Natural Gas, the idea was to call the company Enteron. But the namers then looked in the dictionary and found out that Enteron means "intestines;" they decided to drop the "te" in the middle and go with Enron. Soon Enron may be part of Dynegy, a much smaller company in terms of revenue. If the deal falls apart, it may want to go back to Enteron.

November 28: Kenneth Lay's Email to Employees About Termination of Dynegy Merger

As you have heard, Dynegy is terminating the merger agreement today. Among other things, this means we are now free to pursue other alternatives - which we are actively doing. As a consequence of uncertainty about the deal - and now Dynegy’s announcement - Enron’s debt was downgraded to below investment grade levels today by S&P, Moody’s and Fitch.

In response to this action, we have initiated a plan to protect value in our core trading and other energy businesses. At the same time, we are nearing the completion of the business review process announced last week. Once this process is complete, we will be conducting a comprehensive restructuring of our business. Regrettably, but unavoidably, this will include the sale of non-core assets and the implementation of a comprehensive cost saving plan, including layoffs.

We are taking these actions to focus our resources on preserving the value of our core businesses, retaining our employees who are key to our future success, and maintaining relationships with our trading counterparties. This must be our priority to establish a more solid footing for the rest of Enron.

I know you have serious concerns about what this all means for you. Although, there are no guarantees, you should know that we are still in this fight and remain absolutely committed to protecting the value of the ongoing businesses of Enron. All I can ask is that we all be supportive of each other, stay focused on our work as best we can, and stick together while we work to overcome these latest challenges.

Even six or so weeks ago, none of us could have imagined that we would be where we are today. We will not recover in six weeks what we have lost, but we will work to stabilize and then rebuild this great company. As always, I appreciate the extraordinary contributions each of you make. Thank you.

Ken

November 28: First Email to Collect Home Phone Number and Email Addresses

Ladies and Gentlemen: We've had a great team and a great time working together. Let's keep in touch no matter waht happens today. JL
Code of Ethics
Front cover for the Enron Code of Ethics. Did Grant ever read it? "No."
November 29: Email From the Legal Department about Document Preservation
On Wednesday, October 31, I sent an email to all Enron employees worldwide in order to ensure that Enron employees retained documents that might be relevant to ongoing litigation. New lawsuits have been filed that enlarge the scope of the information that Enron will need to retain. The following list includes both the topics in the earlier email and the topics related to the new lawsuits.

Effective immediately, please do the following:

1. If you have any voice mails that relate in any way to the LJM Deal or Chewco Investments L.P. including any accounting issues related to these transactions, please forward the voice mails to x3-6800.
2. If you have any voice mails that relate in any way to the proposed Dynegy merger or the Enron Corp. Savings Plan, including any accounting issues related to these transactions, please forward the voice mails to x3-6802.
3. If you have any voice mails that relate in any way to Enron's public statements regarding EBS, Azurix, New Power Co., or any voice mail regarding financial transactions involving these matters, including accounting issues related to these matters, please forward the voice mails to x3-6801.
4. If you have any voice mails that relate in any way to Enron's public statements regarding the proposed merger with Dynegy or the Enron Corp. Savings Plan or any voice mail regarding financial transactions involving these matters, including accounting issues related to these matters, please forward the voice mails to x3-6802.
5. If you have any e-mails that relate in any way to the LJM Deal, Chewco Investments L.P., including any accounting issues related to these transactions, please forward the e-mails to LJM.litigation@enron.com.
6. If you have any e-mails that relate in any way to the proposed Dynegy merger, including any accounting issues related to these transactions, please forward the e-mails to dynegy.merger@enron.com.
7. If you have any e-mails that relate in any way to the Enron Corp. Savings Plan, including any accounting issues related to these transactions, please forward the e-mails to enron.savingsplan@enron.com.
8. If you have any e-mails that relate in any way to Enron's public statements regarding EBS, Azurix, New Power Co. or any e-mail regarding financial transactions involving these matters, including accounting issues related to these matters, please forward the e-mails to classaction.litigation@enron.com.
9. If you have any e-mails that relate in any way to Enron's public statements regarding the proposed Dynegy merger or any e-mail regarding financial transactions involving these matters, including accounting issues related to these matters, please forward the e-mails to dynegy.merger@enron.com.
10. If you have any e-mails that relate in any way to Enron's public statements regarding the Enron Corp. Savings Plan or any e-mail regarding financial transactions involving these matters, including accounting issues related to these matters, please forward the e-mails to enron.savingsplan@enron.com.

"LJM Deal" includes LJM Cayman L.P., LJM Co-Investment L.P., TNPC1, Margaux1, Cortez (TNPC), Osprey1, Avici, Catalytica, Fishtail (Pulp & Paper), Backbone, ENA CLO (Merlin), Nowa Sarzyna (Poland), Bob West, MEGS, Yosemite, EECC Turbines (Blue Dog), Raptor 1, Raptor 1a, Raptor 2, Raptor 2a, Raptor 3, Raptor 4, Rawhide, LJM2/WW Loan Agrmt, Osprey 2 LLC1, Rythms, Osprey, Cuiaba, and LJM Cayco Investments.

Also, please forward all future e-mails and voice mails that relate to the above-referenced subjects to the appropriate e-mail address or voice mail box. These procedures will ensure that our electronic documents and voice mails are properly preserved.

Shortly, our lawyers will be collecting our traditional files, i.e., written documents, for possible production in litigation. Until further notice, please retain all of your hard-copy files now in your possession or that come into your possession that in any way relate to:

1. The LJM Deal
2. Azurix
3. New Power Co.
4. EBS
5. Chewco Investments L.P.
6. Accounting for any Enron investments
7. Any Enron public statement made to the investment public
8. Any Enron public filing with the SEC or other regulatory bodies
9. The proposed merger with Dynegy
10. The Enron Corp. Savings Plan. It is not necessary to send documents related to your personal participation in the Plan such as Plan communications to you regarding the status of your account.

December 3: Grant's Final Day of Employment

-----Original Message-----
From: Grant Case
Sent: Monday, December 03, 2001 3:20 PM
To: Courtney Gearhart
Subject: Laid Off...

They told everyone to wait for a voicemail but the feeling is there is nothing left.

Grant

-----Original Message-----
From: Grant Case
Sent: Monday, December 03, 2001 3:20 PM
To: Kathryn Case
Subject: Unemployed

Nuff said. At home right now working on the resume.

I Love you!
G

Grant sent these emails from home using a personal account. His access to Enron email had been terminated earlier that day. The first was to his girlfriend [now wife] and the second to his mother.

Welcome to Enron letter
The letter congratulating Grant on being accepted to the Enron family. The letter was dated six months before he was laid off.






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