the CAMP ENRON Report

... gateway to the next Progressive Era?

Some say it's nothing but a train wreck ... roll in the big cranes, clear the track, see what the crew's been smoking. If I thought so, I'd not be writing this ... and if they thought so, they'd not be drumming so hard.

For a brief orientation, see this
Welcome to Camp Enron

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Camp Enron Archives
01/01/2002 - 02/01/2002 02/01/2002 - 03/01/2002 03/01/2002 - 04/01/2002 04/01/2002 - 05/01/2002 05/01/2002 - 06/01/2002 06/01/2002 - 07/01/2002 07/01/2002 - 08/01/2002 08/01/2002 - 09/01/2002 06/01/2003 - 07/01/2003

(2) All "major" articles of older material have now been imported, some with updates worth perusing. We'll keep it all on the main page for a while, will add a few loose pieces of history, will trim the main page and index the archives for convenience later.


free agent, loose cannon, pointy stick ... taking an imposing analytic toolkit out of the box, over the wall and into the street ... with callous disregard for accepted wisdom and standard English

reading the tea leaves from original angles, we've led with uncannily prescient takes on the federal surplus, the dotcom crash, the "Energy Crisis", the Afghan campaign, the federal deficit.

More where those came from ... stay tuned.

For brief orientation, see this
Welcome to CP

... gateway to the next Progressive Era?

For a brief orientation, see this
Welcome to Camp Enron

Many thanks to Tony Adragna and Will Vehrs, still shouting 'cross the Potomac at QuasiPundit. Early Camp Enron material can be found in QP's Dispatches department.
Thursday, March 28, 2002

--- Up-Checking Lou Dobbs Again ---

Yesterday, CNN's Lou Dobbs claimed Andersen had already accepted the Volcker Plan, and trashed a respected guest expert for suggesting otherwise.

As of this morning, acceptance was a topic of lively debate -- some of it public -- among Andersen partners (who must approve any such plan).

After several hours in teleconference today, Andersen agreed to implement the Volcker Plan. Or did they?

They apparently did agree to spin off non-audit lines of business (or die trying ... it's not clear how much liability might follow these units, effectively blocking the transfers). That's a key part of the Plan ... the "organ donor" model.

They apparently did not agree to replace top management with Volcker's Magnificent Seven. That was also a key part of the Plan. Volcker is expected to comment tomorrow morning.

They have no control over DOJ's pursuit of obstruction of justice charges. Getting charges dropped was an indispensable part of the Plan.

They did agree -- not altogether agreeably -- to keep noncompete agreements in force, preventing the crew from jumping ship. Otherwise they have no leverage, and can't extract any price for units sold.

No word on a decision to launder the corporate carcass through Chapter 11 bankruptcy ... though that seems essential to separating assets from liabilities prior to negotiated sale.

"Another meeting will be held on Tuesday, during which key decisions will be made". (Bloomberg)

For Dobbs and other Orange Shirt sympathizers crying over the slaughter of innocents -- blaming DOJ for destroying 85,000 jobs -- a little data check is in order. Of those jobs, roughly 28.000 are in the US. International affiliates are cutting their own deals all over the map.

Of those 28,000 US jobs, maybe half are in the audit practice ... the only line of business Volcker proposes to keep, even under the best possible outcome.

Of those 14,000 jobs, the new "boutique" audit practic would retain emaybe 20%. The new Andersen won't be equipped to handle multinationals. They won't keep many big-cap clients. They'll compete with the second-tier firms -- newly fortified with Andersen refugees -- for third-tier clients, and the competition can offer broader complementary lines of service.

Those 2,800 survivors will still be saddled with old Andersen liabilities. The best and the brightest will probably buy out to pursue more exciting work under less gruesome conditions.

So 82,000 of those 85,000 jobs were gone anyway, under Andersen's own most optimistic scenario. 25 S&P 500 audit clients already bailed out ... what's that, about 1/3 of what they had in January? [UPDATE: I'm told the audit practice is closer to 40% of current headcount, so jobs at stake are closer to 2,240]

If Andersen wanted to maximize jobs, they'd read the writing on the wall and cut everybody loose. Waive the noncompete clauses, let people start finding jobs in places they can help their friends find jobs. Forget trying to conserve partnership capital ... the feeding frenzy is going to get it all at the end of the day anyhow, why work so hard to keep it in a nice neat stack for 'em?

Or throw the audit practice to the sharks -- it's tainted meat. Pull together the non-assurance assets into a decent business consultancy. Get out of the BIg Five, drag it all through bankruptcy, incorporate, go public. Push the creative/aggressive/innovative envelope ... tell other people how to run their businesses, make PowerPoint presentations till the cows come home, and never sign anything, ever.