Enron's fake dealing room revealed

IT WASN'T just the accounting that was creative at Enron, it emerged today. Analysts were shown around a fake dealing room where Enron employees were choreographed to simulate trading months before the room went operational.

Former Enron chairman Kenneth Lay and ex-president Jeffrey Skilling led the charade, to launch Enron Energy Services in time for the company's 1998 analysts' conference. The only problem was that EES was not up and running in time for the conference, former Enron senior director Joseph Phelan said today. Enron refused to comment.

Phelan said a floor was gutted and outfitted with over £350,000 TVs, computers and telephones to make a 'war room' to wow Wall Street. He said he called it Enron's Potemkin Village, a reference to fake villages built by the Russian General Grigory Potemkin to impress the Empress Catherine the Great when she toured the Crimea in 1787. Lessliterate Enron employees - and perhaps some analysts - now think of the 'war room' as The Sting after the 1973 movie abut a confidence trick, which starred Paul Newman and Robert Redford.

Elaborate plans kept the room jumping when analysts showed up. 'You were assigned a shift, and told when to show up, and they actually scheduled calls with prospective clients and routed them to certain phones - it was pretty stupid,' Phelan said.

But it worked until Enron began to unravel. Phelan claimed that Lay and Skilling led a rehearsal a day before the analysts were due. On the day, they played masters of ceremonies as Wall Street's finest were led in to have the wool pulled over their eyes.

In 1998, Enron Energy Services promised to manage the energy needs of big industrial concerns for a fee, and it made a profit before the curtain came down on the main event.

It was a scam, but it worked, Phelan said. Enron's Lay is not being so forthcoming with this current audience, Congress, the Justice Department and the Securities and Exchange Commission.