EMPLOYEES of Enron, the collapsed Texas energy company, were once told to work in a fake trading room and "look busy" to impress visiting Wall Street analysts, it was alleged yesterday.
In a perfectly choreographed ruse that resembled scenes from the 1973 film The Sting, the sixth floor of Enron's Houston headquarters was kitted out with big-screen televisions, state-of-the-art computers and telephones. The fake "nerve centre" cost $500,000 to build.
Enron was determined to dazzle analysts with its new energy services division, which was behind schedule.
It told the analysts that the division would generate large fees by managing the energy needs of large industrial companies.
Joseph Phelan, a former senior director of Enron, said the company held a day-long rehearsal before the New York-based analysts arrived.
The session was overseen by Kenneth Lay, then Enron's chairman, and Jeffrey Skilling, the company's president at the time. Both men have since left. The ruse took place four years ago, when Enron was one of America's biggest firms.
Mr Phelan said: "To time it right for the analysts' conference, people were asked to come down and act like they were working on deals."
Mr Phelan compared the ruse to the way Preston Tucker, the infamous US entrepreneur, promoted a venture to make "the car of the future" before he had finished working on it.
"It was a scam, but it depends on how you look at it," said Mr Phelan. "You know how Tucker didn't have an engine in his car when he displayed it, but he was real and just a bit behind schedule. I think that was the way everybody justified it."
The fake trading room offers a glimpse into how Enron became a darling of Wall Street during the 1990s, with analysts urging investors to buy shares in the high-tech energy company. It also highlights the culture of deception at Enron, that ultimately led to it filing the biggest bankruptcy in history last December.
Enron used a complex web of subsidiaries to hide $2.6bn of debt from investors and artificially inflate its profits by $600m.
Enron is now worth nothing, with creditors fighting over its corporate carcass. ( The Times, London)