Critics describe Andrew Fastow, who’s at the center of the controversy over the collapse of America’s seventh-largest company, as an aggressive, arrogant businessman. Friends call him a mensch.
THE AMOUNT FROM ENRON Corp. was $100,000. From Salomon Smith Barney, the global financial firm working closely with Enron, it was $400,000. From Enron chairman Ken Lay and wife Linda, it was $850,000. All of it was shepherded by Enron’s chief financial officer, Andrew Fastow.
Fabled campaign contributions to George W. Bush and Congress? Deposits into one of the 800 entities that Enron chartered in the Cayman Islands to avoid U.S. taxes? No, and no. They were gifts made at a fund-raising event last year for the Holocaust Museum, Houston, Texas’s own mini-Yad Vashem.
In all, Enron was connected with about a third of the $3.5 million raised at the event, which honored former Texas senator Lloyd Bentsen and Holocaust chronicler Ruth Gruber.
As the Enron financial and political scandal has spread geometrically to almost every corner of American public discourse, it has picked up Jewish angles along the way. Enron’s philanthropic connection to the museum, where Fastow was finance chairman, is actually one of the least controversial points.
Fastow, the architect of partnerships that hid the corporation’s debts from analysts and stockholders, is getting much of the blame for Enron’s financial implosion. Active in his Conservative synagogue and elsewhere in the Houston Jewish community, he has been portrayed in newspapers and magazines as coarse and devious at work. In contrast, Jewish friends say that his soul, warmth and commitment to the religion are all great. One of his lawyers says Fastow has suffered anti-Semitic slurs and threats as the scandal has unfolded. In December, when rumors flew that Fastow had fled the country with some of the $53 million he made from the partnerships and Enron stocks, his lawyer assured the press that Fastow had remained in Houston, teaching a synagogue class about Hanukkah.
In the manipulation of the partnerships, one of Fastow’s former assistants, Michael Kopper, made $10.5 million last year on a 1997 investment of $125,000. In the true Houston style of conspicuous consumption, the openly gay Kopper and his domestic partner built a lavish modern house. The Houston rabbi who had conducted Fastow’s wedding presided over the mounting of a mezuzah on Kopper’s new front door.
After Fastow and Kopper refused in February to answer questions from a congressional committee, citing their constitutional rights against self-incrimination, Enron tax lawyer Jordan Mintz did testify -- as one of the Enron insiders shown to have expressed doubts about the company’s structure months before its fall.
Calm as he was at the bat mitzvah of one of his daughters two weeks earlier, Mintz coolly gave the congressional panel some of the fodder it was looking for to denounce Enron. He said Fastow had hidden his personal profiteering from Enron’s chief executive officer Jeff Skilling. "He said that if Jeff ever knew how much he made from the [ventures involving partnerships], he’d have no choice but to shut them down," Mintz said.
Lay and Skilling, the topmost former Enron leaders, are not Jewish. And with Mintz on the opposite side from Fastow and Kopper, the Enron morality play has, at least so far, been one that reflects on some Jewish individuals rather than on Jews in general in Houston, whose numbers are probably greater than the widely quoted estimate of 60,000, in a metropolitan area of about 3.5 million people.
The biggest fallout seems to be fear that there will be fallout.
"The aura of scandal is something that concerns everybody," Shaul Osadchey, the rabbi at Fastow’s synagogue, said of his congregation. "It’s just more sub rosa."
The local Jewish Herald-Voice newspaper is reporting on Enron threads such as the donations to the Holocaust museum. But publisher Joseph W. Samuels said he is treading carefully. "We didn’t want the Jewish community to be labeled as a big factor in what was done wrong," he said. "We don’t want to hurt the community."
Lawyer Bobby Lapin -- a friend and admirer of Fastow, an acquaintance of Mintz and a former president of Houston’s Jewish Community Center -- said he has seen no evidence of Enron-related enmity toward the Jewish community. "It doesn’t hurt that Jordan is coming out so good in this," Lapin said. In other words, Mintz’s acquisition of a congressional halo provides some counterweight to the devil’s horns being drawn on Fastow and Kopper.
The Anti-Defamation League, whose donors included Enron, but not Fastow or Kopper, tracks "hate crimes" in each state. Regional director Martin Cominsky of Houston said there has been no noticeable surge of anti-Semitism connected to the Enron scandal -- just a surge in reporters asking if there has been one. Cominsky also said there has been no serious discussion of whether the money that Enron and Fastow directed to the museum and other Jewish organizations is now tainted. "People were generous, the company was generous," he said. "Those who made the decisions (to give) were well-intentioned; they supported very important missions and very important work. We are grateful."
Nor has there been a national backlash. "It has not been a factor in the Jewish community, outside of Houston," a spokesperson at the national ADL office in New York told The Report. "We haven’t seen anything."
FOR THOSE FOCUSED on war, peace and other prime issues untouched by Enron, a scandal primer: Headquartered in Houston, capital of the U.S. energy industry, Enron was mainly a natural gas pipeline company until the early 1990s. Its size and stock price zoomed when it adopted the tools and techniques of Silicon Valley and Wall Street, becoming a commodities trader of natural gas, electricity, Internet services, even wood pulp. It stayed a step ahead of government regulations while making friends with the Bush administration and lawmakers from both major parties.
Houston’s long-ago cash crops were rice and cotton. Then Houston became a boomtown for oil, an industry that, while establishing myriad ties to oil-rich Arab countries, has never featured many Jews.
As Enron expanded beyond the sociology of the tradition-bound energy business into fields that required more expertise in law and finance, it attracted experts from across the world, including Jewish Americans. Fastow, 40, Kopper, 37, and Mintz, 45, joined Enron during its 1990s upswing. Fastow, who came to Houston and Enron in 1990, after working at Continental Bank in Chicago, was born in Washington and grew up in New Jersey; Kopper and Mintz are from Long Island.
But Enron’s new-technology palace crumbled late last year when it was discovered that, while some executives left with hundreds of millions of dollars in earnings, the corporation had hid as much in debts, thanks largely to Fastow’s mecha-nisms. About 4,000 workers, some of whom lost the life savings they had placed in once-booming company stock, were laid off. The stock fell from about $90 a share to less than $1. Enron, the seventh largest company in the U.S., went bankrupt. Clifford Baxter, a former executive who had questioned some of the financial arrangements, killed himself after facing the prospect of testifying to Congress about his former co-workers.
If ridicule and recriminations were riches, Enron would have recovered already. The federal government is investigating whether Lay, Fastow and others broke criminal laws; banks, investors and former workers have filed massive lawsuits against the company and its former captains; the global Arthur Anderson accounting firm and the Houston law firm that allowed some of the now-questionable financing arrangements are facing similar scrutiny. Along with shredded reputations, there are allegations that Enron and Anderson shredded important documents.
Fastow’s defense, passed along subtly through friends rather than overtly, is that all of his financial alchemy was approved ahead of time. Indeed, Enron’s board of directors waived the corporation’s ethics code to allow Fastow to set up the outside partnerships, which essentially bought some of Enron’s financial risks. The arrangements sometimes left Fastow negotiating against his employers.
At least two of the partnerships carried the name LJM -- the initials of Fastow’s wife, the former Lea Weingarten, and their two sons, aged 6 and 3. Lea is from a Jewish family prominent in the Houston commercial real estate and grocery businesses. She worked a while for Enron, serves on the boards of charities and the Jewish Community Center and collects modern art, some of which the Fastows loaned to museums. The couple met at Tufts University in the Boston area, where Fastow studied Chinese and economics, and later moved to Chicago, where they got MBAs at Northwestern University.
To say that Andrew Fastow is a man of at least two sides is to say that the world contains at least two religions. While repre-senting Enron in business showdowns, "Andy’s way of working was to make everybody’s life miserable until he got what he wanted," Houston lawyer Doug Atnipp, who negotiated agreements with Fastow, told the Houston Chronicle. "He’d make inappropriate comments, offensive comments to the group at large about their work, their ineptitude." Echoing one of the most common criticisms of Enron, Atnipp said Fastow’s attitude merely mirrored his firm’s taste for arrogance and intimidation.
Lapin says he is stunned when he hears such remarks. He knows Fastow as modest and giving. "He’s a mensch, and I know that couldn’t be further at odds from what the business community has said about him," he says.
When he was out of the office, supportive friends say that Fastow didn’t try to impress people with his wealth or his station. The Fastows still live in Southhampton, a leafy Houston neighborhood near Rice University. Their two-story brick house, valued at about $700,000, is very close to the home of Sherron Watkins, who wrote an internal Enron memo predicting his fall. They are also building a new home, in what the Washington Post described as "country manor" style, on land valued at $1 million in River Oaks, Houston’s poshest neighborhood where Lay and Skilling live.
Fastow’s family has set up a charitable foundation that contributed money to two Conservative synagogues in Houston as well as nonsectarian local institutions including the Boys and Girls Club and the Contemporary Art Museum. For a while his name was listed on one of his synagogue’s websites as being part of a weekly minyan team.
Osadchey, the rabbi, says it is possible to rationalize the sharply conflicting characterizations of Fastow. "People can be one way in one setting and another way in another setting," he says. "We’ve seen that in the arena of politics and religion, and business, too."
The rabbi asserts that it is premature to pass judgment on Fastow and the other figures atop the Enron epic. But, he also says, "A lot of lives have been adversely affected, and tragically so. And that is something they all have to own up to."
(March 25, 2002)