Why I joined the Enron board.

• Author: Troubh, Raymond S.
• Position: ROAD TO XL

Ed. Note: Ray Troubh has served as an independent financial advisor and corporate director since 1974. He has been a nonexecutive director of more than two dozen public companies. He was named a director of Enron Corp. in November 2001 and subsequently served as nonexecutive chairman until Enron's emergence from bankruptcy In November 2004. This recounting of his Enron board experience originally appeared in his article, "What It Now Means to 'Direct' " [First Quarter 2006]..

I joined the Enron board on November 27,2001. The bankruptcy petition was filed five days later. I had been asked to come on as an Independent director to help investigate so-called "related party transactions." Another newcomer was William Powers, dean of the University of Texas Law School, who had joined the board a few weeks before the bankruptcy filing (which up to that date was the largest bankruptcy filing in U.S. history). I was appointed to a three-person committee, chaired by Bill Powers --hence, the Powers Report--to carry out the investigation and report to the board.

The report detailed a startling cobweb of financial maneuverlngs leading to the admission of guilt by the chief financial officer. A great sadness not detailed in the report was the economic and psychological suffering of thousands of people, most of whom had no responsibility for the cataclysm.

When you have volcanic economic eruptions like this, directors must try to calm things down, act rationally, and keep the ship afloat. This was very difficult for a roomful of nervous Enron directors convening on one fateful Saturday at 7 a.m. The scene was a New York City boardroom high in the sky overlooking Central Park. These directors were being told in mournful tones by Bill Powers that a 200-plus-page report was about to be issued acknowledging that their baby was bankrupt, their published earnings were suspect, and their theretofore pristine reputations were likely to undergo serious denigration, stigma, and damage. Unfortunately, that is what happened.

The Powers Report was an early model of an honest effort to clarify and simplify an exacerbated situation and yet restrain venom and bias. Without subpoena...