REVIEW: Journalists Tell the Enron Story in Two Different Ways

Until the Graduate Management Admissions Test can screen out sociopaths applying to business schools, reporters will have more Enron-style stories to tell.

That's why two excellent books on Enron Corp. -- 24 Days and The Smartest Guys in the Room -- should be taught in journalism schools.

Taken together, the two books by reporters who covered the Enron debacle for The Wall Street Journal and Fortune are like a DVD of your favorite movie. You get the theater version plus much more.

Indeed, the books achieve separate goals.

The Smartest Guys by Fortune writers Bethany McLean and Peter Elkind presents the definitive story of the rise and fall of Enron. An old-economy pipeline business is transformed by arrogant MBAs into the twilight zone of high finance and accounting gimmicks, with tragic consequences.

McLean and Elkind conclude: "While the people at Enron were smart about bending the rules, they were not smart about understanding where all that bending was taking them."

Journal reporters Rebecca Smith and John R. Emshwiller, who led that newspaper's award-winning coverage of Enron's downfall, make themselves part of the story in 24 Days.

By normal standards, their tale of covering Enron strays over the line of journalistic detachment and runs the risk of self-indulgence. But given the criticism the financial press took in the wake of the Enron collapse (Why didn't you warn us?), their story is not only justified, it provides valuable lessons for reporters covering the next Enron.

Writing in the third person, they develop their own characters. Nearly all business journalists call public relations officials, such as Enron's Mark Palmer: "Emshwiller could see Palmer's face, but he imagined the tiniest glisten of sweat gathering there."

With these books, the very language of business journalism has changed forever. Henceforth, no reporter can legitimately allow a PR spokesperson get away with saying that a glitch in a quarterly report is "just a balance sheet issue." The entire Enron mess was a balance sheet issue.

There may be no way to abolish the quarterly kabuki dance of earnings-per-share guidance, forecasts and reports. But it's harder now to pretend that the ritual represents news.

What hasn't changed is reporting technique. Many business reporters envy The Wall Street Journal's power in obtaining sources and news. But Smith and Emshwiller worked the phones like fledgling reporters at a second-tier newspaper.

You won't forget Smith's account of her interview with Carol Baxter, wife of Cliff Baxter, the former Enron executive who killed himself after the company's troubles surfaced.

Just as important, the Journal got the story by writing the story. At the first hint of a potentially big story, too many writers and editors lapse into project mode -- letting the story go cold while they make unwarranted assumptions and plan an award-winning presentation. News begets news, as sources respond to persistent and timely coverage.

For journalists, the major problem with The Smartest Guys is the absence of footnotes or an addendum on sourcing that might have provided how-to tips. Such a service to their profession was not their mission.

In the same vein, 24 Days slips when it becomes too involved in the Enron story and stops covering the two main characters -- Smith and Emshwiller. For example, we're not told how the reporters obtained rich anecdotes from rank-and-file Enron employees Marie Thibaut and Janice Farmer.

Sometimes, of course, sources and reporting techniques must be kept secret. But good journalism suffers when reporters try to play the games of government prosecutors. As one anonymous employee wrote to Fortune, "Employees at Enron know what the truth is. All you need to do is ask them."

Copyright © 2008 Donald W. Reynolds National Center for Business Journalism