Enron's Green Acres
Those Millions Built Mansions and Purchased Ranches. Then the Company Bought the Farm.

 

By Jennifer Frey and Hanna Rosin
Washington Post Staff Writers
Monday, February 25, 2002; Page C01

HOUSTON

Downtown, across from Enron's gleaming corporate headquarters at 1400 Smith St., an unfinished $200 million, 40-story tower designed to be Enron's twin building sits like a shell. It's for sale now, one of so many gems coated in the ashes of Enron's collapse.

At the Museum of Fine Arts, a $575,000 soft sculpture by Claes Oldenburg -- a part of Enron's corporate art collection -- is stored in a crate.

At Advantage BMW, a popular Houston shopping spot for high-end Enron employees, Cliff Baxter's name was removed -- by his request, before his suicide -- from the waiting list for a coveted 745 luxury sedan.

And in Aspen, Colo., two of the four properties once owned by former Enron chairman Ken Lay are under contract -- one a "cottage" that sold for $10 million, which works out to an Aspen real estate record $3,330 per square foot.

In the Powers report, the Enron board's investigation of the company's unraveling, the firm's "tragic" collapse is attributed, in part, to "a culture that appears to have encouraged pushing limits."

For a precious few, that culture wasn't confined to Enron's trading floors and accounting offices -- it became a way of life in which nothing was ever enough.

It wasn't enough for Lay to have one house in Aspen, he had to have four. It wasn't enough for former Enron president Jeffrey Skilling to hike in the Rockies, he wanted to scale glaciers in Patagonia. And former chief financial officer Andrew Fastow, who loved art, wanted Enron's corporate collection to rival any business's.

And it wasn't enough to have one gleaming tower in downtown Houston. Enron had to have two.

Think strip clubs and Ferraris. Bigger houses, better boats, new wives. Custom-designed vacations packaged by a company that does trips for the likes of Lyle Lovett and "Survivor II's" Keith Famie. And a horse so famous it was invited to perform at Linda McCartney's funeral.

It was quite a ride they took, Enron's top brass. And everybody had their thing: Fastow liked art. Skilling had a yen for travel adventures. Ken Rice -- another top Enron executive -- adored Ferraris. Lay loved real estate ventures. Lou Pai liked to indulge his second wife (whom he met in a strip club) and her passion for fine horses. Baxter adored boats.

They lived a life of perks and privilege, and they knew it. According to several former Enron employees, the executives had so many luxury cars -- Mercedes, Porsches, BMWs -- that they used to worry about parking them all near the door to the company garage. Not for fear of theft, but for fear that their $50,000-a-year employees might get the wrong message when they went to retrieve their Toyotas and Fords.

Of course, most Enron employees weren't the ones going on the ski weekends to Beaver Creek, Colo., or flying in one of the company's corporate jets -- there was a fleet of them stored in a private hangar at Bush Intercontinental Airport. Enron was definitely a two-tier society.

And, from the looks of life in Houston these days, it still is.

Upward Bound

Only a few years ago, Skilling, Fastow, and Michael Kopper -- Fastow's lieutenant in the Enron scandal, according to conclusions drawn in the Powers report -- all lived within walking distance of one another in the quiet upper-class neighborhood called Southampton Place, which borders Rice University. It is a nice neighborhood, with houses that go for around a half-million dollars, but all on small lots, with alley parking in the back. Skilling lived in a simple, square brick house with his wife and three children. Kopper lived a few blocks away in a cottage he eventually remodeled to have an almost Japanese-style look, the house taupe in color, with a gray roof.

Fastow -- who is still residing in his Southampton house while his new one is under construction -- bought one of the larger houses on his block, a red-brick structure with white trim and a second-floor balcony.

This was before they all began upgrading their lifestyles. Before Skilling divorced his first wife in a messy, contentious battle and took up with an Enron secretary whom staffers called "Va Voom" behind her back. Before Fastow formed his side partnerships, enlisting Kopper's aid, and walked off with a minimum of $30 million. Before Enron's stock took off, and everybody made tons of cash.

And before all three men -- Skilling, Fastow and Kopper -- bought new properties, tore down the existing structures, and started building their dream houses. Once again, all in the same neighborhood. The neighborhood where the rich live in Houston. The neighborhood where Lay lives. River Oaks.

So now Skilling resides in a mammoth Mediterranean-style home with a tile roof, and he's engaged to Rebecca Carter (the one known as Va Voom), who under Skilling was promoted to executive secretary to Enron's board of directors at a salary of $600,000. Fastow is building something that looks like a country manor, almost Tudor-ish. And Kopper and his partner William Dodson opted for a postmodern abode -- boxy, all white and beige and glass and hard angles. A house so close to the Lays' luxe apartment building that the shadow practically falls across Kopper's lawn.

Lay -- who also divorced his first wife and is married to his former secretary -- spent his money in Aspen, where he bought three homes and one lot. He also snapped up several properties in Houston -- mostly older homes on blocks where massive renovations have taken place, areas clearly in the midst of major renewal. These are the homes he's trying to unload now, as he scrambles to pay back multi-millions in debt. The one he's keeping? A $7.1 million apartment in the Huntingdon -- Houston's finest apartment building -- where camera crews routinely sit outside and the Lays' neighbors now grumble that their dinner guests are practically patted down by security before being allowed to enter the building.

Pai picked up 77,500 acres (along with some partners) in southern Colorado -- land that former shareholders and employees are trying to attach in their lawsuits. He also bought a ranch in suburban Houston for his second wife, Melanie Fewell Pai, and set her up with a breeding and training operation for top-quality dressage horses. One of the horses he bought for her is named Gucci. Another, named Pay N Go, had previously been summoned by Paul McCartney to perform at his wife's funeral in New York.

"The houses really aren't elaborate for Houston," says one top interior designer in town. "They are pretty much in keeping with what a top executive would have."

Skilling's house is decorated in a sleek, black-and-white theme, in homage to Enron's corporate colors. But he hired the Houston-based design team of Michael Galbreth and Jack Massing -- who are known as the "Art Guys" -- to do his guest quarters.

Funky, humorous -- at times even described as adolescent in their approach to design -- the Art Guys did the bedroom with a folk art approach, with lots of color and a focus on lips. Lips on the walls. Lips on the sheets. In some Houston circles, the room is referred to, simply, as the Lip Room.

It was perfect for Skilling, a man who lives to be on the edge.

The Fast Track

The trip was to Mexico, to race motorcycles in the famed Baja 1000. It was a Skilling trip, of course, one of his annual adventures, where he took his group of "Skilling's Boys" -- those employees who were his favorites -- to some exotic location to participate in some high-risk activity.

Once, they climbed the glaciers in Patagonia. Another time, it was off-road racing in Land Cruisers in the Australian outback.

This time, they booked a trip with the Chris Haines Motorcycle Adventure Co., a Mexico-based tour group. Haines -- who declined to give details about the Enron outing -- once designed a trip for Lovett and a bunch of his buddies, and the musician was so enthralled he thanked Haines on the liner notes of his next album. Famie -- the chef from "Survivor II" -- taped an episode of his Food Network show "Keith Famie's Adventures" on a Baja trip with Haines (the episode airs today).

All the Enron employees know is that one of Skilling's Boys came home from that adventure with a broken leg.

"That was the kind of culture Jeff built around himself, where someone would risk their life just to get a pat on the back from him," says one former Enron executive, who requested anonymity.

And for those young people who made it, Enron was unreal. "Exhilarating," "freewheeling," "innovative," in the words of one 30-year-old who leaped three titles in three years. There was no cap to the bonuses, which could get as high as $1 million. Here, young Ivy Leaguers believed they could reinvent not just the energy business but the American business model, the whole U.S. economy. Enron combined the glamour of NASA and Wall Street.

"We thought we could change the world, we really did," said one high-ranking young executive.

As the company grew and took on ever riskier propositions, the strain showed inside the building. Skilling had instituted performance review committees to determine the staff's top 5 percent and the bottom 5 percent in each division, and three levels in between. Eventually nicknamed "rank-and-yank," the system inspired all sorts of internal drama and sabotage. And the outcomes were brutal.

The bottom 5 percent could expect to be sent to the redeployment office, also known as the "office of shame," where they got a phone and a desk and a chance to be rehired by another division.

The top 5 percent could expect to be invited to Mexico or Aspen with Skilling. They also frequently made their way over to Advantage BMW. Wayne Wickman -- who runs the dealership -- used to love it when he saw Enron traders come through his door.

"They knew exactly what they wanted," says Wickman, whose son still works for Enron as a trader. "And it was fun because it took about two minutes to do a deal."

The most popular models were the M5s and the M3s -- "the fast cars," Wickman says.

"That was the world they lived in," he says. "It was the culture over there -- they were thoroughbreds, bred for speed."

These days, though, Wickman's son goes to work worried about how long his job will last. And Wickman -- like so many Houstonians -- just can't understand what happened in his town.

A Muddled Display

Pre-printed invitations to local charity events are still arriving in the best Houston mailboxes with Ken and Linda Lay listed among the hosts. No one expects them to attend anymore. The Lays -- who have long been involved in some of Houston's biggest charities -- haven't been seen out much lately.

Skilling and Lay belong to the River Oaks Country Club -- the second-most exclusive in the city, beyond the Bayou Club -- but they haven't been seen there of late either. Fastow is a big patron of the arts (and his wife, Lea, comes from a well-known local family), but even before Enron self-destructed, they were not often visible on the social scene.

For all their money and presence in Houston -- the name on the baseball diamond, the frequent sponsorship of charity events -- most Enron executives weren't really a part of Houston's top society circle. They weren't fourth-generation Houstonians -- which is basically what it takes to get into the Bayou Club. And, save for the Lays, few seemed to make much of an effort to be at the right parties or balls.

What Enron was, though, was a good corporate citizen, one that spread its money throughout the city. And the latest big Enron project was the formation of a great art collection, one that would be on display to the public as well. Enron executives -- particularly Fastow -- envisioned this collection as one that would be mentioned in the same breath as those held by companies like Chase Manhattan and Paine Webber. Prominent members of the Houston art world, including Ned Rifkin -- then the head of the Menil Collection, now the director of the Hirshhorn Museum -- and Barry Walker, a curator at the Museum of Fine Arts, were recruited to be a part of the collection committee, which was headed by Lea Fastow.

According to Walker, the plan was to forge a collection full of new, cutting-edge pieces, along with a few examples of earlier modernist classics to work as anchors.

"They wanted the work to be contemporary and adventurous -- the work was supposed to reflect Enron's culture," Walker says.

So the group bought a Bridget Riley and a Bill Viola projection piece, the Oldenburg and an important Mark Puryear titled "Bowers" that went for nearly $700,000 at auction. As one of the anchors, they purchased a piece by famed minimalist Donald Judd. When the bankruptcy occurred in December, more than a dozen pieces had been collected, costing in the millions, and the committee was in the process of reviewing proposals by artists for solicited pieces as well.

These days, though, Walker isn't sure where all of the art is, or how it's being handled. Some pieces, he says, were never delivered, and remain at different galleries and studios. The two major pieces, the Puryear and the Judd, were never installed in Enron's headquarters. The Puryear has been lent to the Menil, and the Oldenburg to the Museum of Fine Arts. The Oldenburg, called "Soft Light Switches," is a red-vinyl version of the traditional double light switch. Some experts consider it a pop masterpiece. It saddens Walker that it's in a crate and not being seen.

"If we're going to show a work," Walker says, "we usually get permission to exhibit it, and I don't know who to get permission from now. I've never been in a Chapter 11 situation before. This is new territory for me."

Staff researcher Lynn Davis contributed to this story.

 

2002 The Washington Post Company