Monday, June 19, 2006
The Mountain Man from McKinsey
Vince: I was in the jungle—the bush we called it—for approximately nine months...
Sheldon: Nine months! That must have really been something!
Vince: It was. I saw things... They have tsetse flies down there the size of eagles.
I thought of that exchange from “The In-Laws”—the original, funny Peter Falk version, not the newer, un-funny Michael Douglas version—while reading about now-convicted former Enron President Jeff Skilling’s alleged Mountain Man adventures in this weekend's Wall Street Journal.
In "The In-Laws," Falk plays an elusive CIA agent (Vince) whose bizarre behavior and mysterious absences begin to worry the family of a nerdy dentist (Sheldon), played by Alan Arkin, whose daughter is going to marry Falk’s son.
(Among the many great lines is Falk telling a cab driver who asks about his CIA career, “Are you interested in joining? The benefits are terrific. The trick is not to get killed. That's really the key to the benefit program.”)
And what reminded me of that movie while reading the Journal story on Skilling's recent trial is when I came across the laugh-out-loud portion of the article, which begins (and I am not making this up):
To prepare for the rigors of the trial, Mr. Skilling said he wandered through the Utah wilderness for two weeks…
Now, the story itself is not strictly about Skilling’s account of roughing it in Utah—that is meant to be, I think, a compelling sub-plot of the larger story, which is what Skilling now claims did him in, as revealed right in the headline itself:
In New Interview, Skilling Says He Hurt Case by Speaking Up
In other words, what convicted Jeff Skilling, we are told, was Jeff Skilling’s big, honest mouth.
The surprise, I think, is not that Jeff Skilling is coming up with a new spin on his own conviction—he’s been all doe-eyed about the Enron collapse since Day One, claiming shock and surprise while trying to justify himself, his actions and his career, both in court and on camera ever since he left the controls and parachuted safely to the ground just as the plane was about to go into a death-roll.
No, the surprise is that this piece of so-called reporting is by no less than John Emshwiller, the Journal reporter who worked the Enron story as that company was unraveling in no small part due to Skilling’s failure to build an “asset-lite” energy empire that could withstand margin calls.
Alert Enron-watchers may recall that Emshwiller and a colleague turned that reportorial work into a book with a title that was an unwieldy and self-congratulatory as the book itself:
24 Days: How Two Wall Street Journal Reporters Uncovered the Lies that Destroyed Faith in Corporate America
Despite having that high-minded book title on his resume, Emshwiller does not, I think, distinguish himself in his new story, which attempts to remake Skilling’s downfall from being unethical in business dealings to being too ethical in his pre-trial dealings:
He [Skilling] said that a series of interviews with the Securities and Exchange Commission ended up providing prosecutors with pieces of information that they effectively used against him at the trial. "Stupid me," he said with a laugh, though he added that he still believes speaking out was the "ethical" thing to do.
In other words, ‘If I hadn’t been so darn honest,’ Skilling tells the reporter, ‘I might not be headed to jail.’
What a guy!
Yet Emshwiller swallows it hook, line and sinker—and without the least effort to cast new light on what he had, previously, called “the Lies that Destroyed Faith in Corporate America.”
Now, it is worth remembering that Skilling’s trial defense rested on the notion that no fraud, no crimes, no nothing had occurred on his watch at Enron. Enron’s collapse was instead caused by a renegade CFO and skeptical short-sellers who—how is not clear—helped destroy a company he had quit for “personal” reasons.
It is also worth remembering that while still at the controls of the jet, Skilling had so little use for skeptics of Enron’s “asset-lite” business model either from within the company or without that he lashed out at the only investment analyst on or off Wall Street who had the temerity to question Skilling on a conference call why Enron did not make balance sheets available at the time of earnings reports—by calling Richard Grubman “asshole” instead of answering Grubman's astute question about the balance sheet.
(My apologies to readers accustomed to the “clean language” provision of this blog, but I use the word itself and not a euphemism in order to make it clear precisely what Skilling said and how he meant it.)
Ask any short-seller in America who made money on Enron’s collapse why he or she shorted Enron stock in the first place, and they will probably tell you it was Skilling’s performance on that call in general and his use of that epithet in particular that caused them to begin to investigate the company. It was in fact the “tell,” as Jim Cramer’s home-gamers would call it, of a serious problem going on behind the curtain at a company which Jim Chanos had rightly been calling a ‘hedge fund in drag’ for at least year before it collapsed.
Nevertheless, Emshwiller appears quite taken with Skilling’s new-found humility and creates a sympathetic portrait, with philosophical quotes on life (“better than the alternative”); new-found perspective about jail-time (“A lot better people than I am have been in prison…”); and family (“My children were never going to see me take the Fifth…”).
But he saves the whopper for last, repeating as gospel Skilling’s far-fetched tale of wondering the Utah wilderness like a later-day Joseph Smith as part of his trial preparation:
Mr. Skilling said he wandered through the Utah wilderness for two weeks, hiking up to 30 miles a day, as part of a survival-training program.
Anyone who actually does hike—and by that I mean further than from their apartment building to the nearest Starbucks—knows the idea a former pinstripe-wearing McKinsey-trained Master-of-the-Universe spent two weeks in the Utah high desert “hiking up to 30 miles a day” is about as believable as the notion that Enron was a financially sound company that collapsed simply because a CFO did things he wasn’t supposed to do while some short-sellers blew it all out of proportion.
You live in Morgan Hill, California and work in Santa Clara? 30 miles. Live in Novato and commute to downtown San Francisco? 28 miles. Short Hills to Rockefeller Center? 26 miles. Wellesley to Boston and back to Wellesley? 30 miles.
So if you ever decide to walk from your house in Morgan Hill to your job in Santa Clara in one day—heat and soot and baking sun and all—and if you don’t shoot yourself or beg a passing SUV to run you over as a mercy killing, then you will have walked almost exactly as much as Jeff Skilling is supposed to have walked in a day while on his "survival" sabbatical.
But Emshwiller doesn’t bother to wonder how a middle-aged non-former-athlete could perform such Lance Armstrongish feats—instead, he dutifully reports the rest of Skilling’s tale of Mountain Man derring-do:
He slept on the ground, had no food for the first three days and then dined largely on whatever he could find, including insects. (He recommends caterpillars and grub worms, which "are basically pure fat.")
Three days with no food! Grubs! Caterpillars!
Which brings me back to “The In-Laws”—when Sheldon the Dentist asks Vince about the "giant tsetse flies," and Vince’s wife recalls the pictures Vince had supposedly taken of them.
Unfortunately, Vince tells Sheldon, the pictures were in his coat, and, “I had that jacket Martinized.”
I’d love to see Skilling’s pictures from his Mountain Man adventures. Especially the meals, what with caterpillars and the grubs on the menu.
I suspect, however, they got Martinized.
I Am Not Making This Up
© 2006 Jeff Matthews
The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.
Posted by Jeff Matthews at 8:48 AM