Contents
Foreword by Joseph T. Wells......................................13
Introduction.....................................................17
Chapter One - Executive Compensation.............................23
From salaries to stock options...................................27
Executive compensation goes Hollywood............................28
Easing of restrictions...........................................30
Unaccountable....................................................32
CEO pay versus the average wage..................................35
Postscript to Waksal's crime.....................................37
Chapter Two - Enron..............................................39
Edifice of mirrors...............................................41
From gas pipelines to the "gas bank".............................42
Enron's business.................................................43
The $80,000 lemonade stand.......................................46
Fastow's secret partnerships.....................................48
Bank prostitution................................................52
Bogus businesses.................................................54
Clipped hedges...................................................57
Sherron Watkins' letter..........................................58
Enron's implosion................................................60
Criminal investigations..........................................61
Aiding and abetting..............................................62
Chapter Three - The Auditors.....................................65
The bad olddays.................................................66
The true believers...............................................68
From profession to business......................................69
Loosening the legal shackles.....................................72
Auditors serving two masters.....................................75
Consultants versus auditors......................................79
The management of Waste Management's earning.....................81
The black hole at Enron..........................................82
The shredding of Arthur Andersen.................................84
The verdict......................................................86
Pyrrhic victory..................................................88
Chapter Four - WorldCom..........................................91
Motels and Ma Bell...............................................95
The masterstroke: MCI............................................97
Master and commander of the board................................98
Ebbers' money troubles...........................................100
Cutting corners..................................................102
Capitalization of line costs.....................................104
The fraud unravels...............................................106
Trial and conviction.............................................109
Chapter Five - Tyco..............................................113
A difficult trial................................................114
The board's duties...............................................117
A criminal birthday party?.......................................118
A brilliant career...............................................123
Beginning of the end.............................................127
The finale.......................................................130
Retrial..........................................................132
Chapter Six - HealthSouth........................................133
An Alabama success story.........................................135
Living in a dream world..........................................138
Cooking the books................................................141
Security and paranoia............................................145
Televangelist....................................................148
Aquittal.........................................................149
Chapter Seven - Stock Analysts...................................153
Conflicts of interest............................................157
The end of an era................................................158
Jack Grubman's revolution........................................162
Judgment day.....................................................164
Chapter Eight - The Securities Cops..............................169
The Keystone Kops................................................173
No respect.......................................................174
The starving of the SEC..........................................179
Stagnation.......................................................182
Cops without bullets.............................................184
Congress acts....................................................187
Competition......................................................189
Epilogue.........................................................191
Lessons learned..................................................195
Notes............................................................201
Special Thanks...................................................215
Index............................................................217