Part One

Visionaries, Hucksters, and Con Men: CEOs and the Games They Played

One of the striking things about this most recent wave of corporate fraud and deception is how much of it was not centered on Wall Street, the traditional home of financial scandal. Of course, all of the fraud was in one way or another connected to Wall Street, as CEOs misled investors and rigged financial results in an attempt to keep their stock price high. But whereas the Street was the site of the great scandals of the 1920s and the 1980s, this most recent wave swept up not merely investment bankers and stock analysts but CEOs, CFOs, and vice presidents. And the companies that made headlines were not fly-by-night operations, either. Enron was the seventh-biggest company in the Fortune 500. WorldCom was one of the world's biggest telecom companies. Tyco was routinely compared to GE. And Qwest, after merging with US West, had become one of the country's most important phone companies.

How did this happen? The pieces in this section, most of them compelling narratives about corporations sliding down the slippery slope toward fraud, go a long way toward answering that question. They give us CEOs, fed on a diet of hefty stock-option packages and hyped-up publicity, who came to drink their own Kool-Aid, imagining that they understood what no one else did, and that there were no obstacles to their visionary schemes. In many cases, it seems clear, executives did not start out intending to deceive. Instead, they made outrageous promises and then found themselves playing fast and loose with the rules in a desperate attempt to make those promises come true. Others, though, were more cynical about the process, using the hype machi...