Chesapeake-Enron Comparison Once Again Invoked, But Differences Are Apparent

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Back in May we mentioned an article from Reuters which examined the possibility that Chesapeake was frighteningly similar to Enron.

A new article from Rigzone considers the Enron and Chesapeake similarities once again, and concludes that there aren't many.  From the article:
Enron filed for bankruptcy in late 2001 after it came to light that the company's accounting practices were hiding millions in debt from failed business ventures. The Enron scandal raised questions about the accounting practices of many U.S.-based corporations, and played a role in lawmakers passing the Sarbanes-Oxley Act in 2002.
However, Brent Longnecker, who has experience working with what he describes as "bad Enron and good Enron," thinks that Chesapeake will emerge from the recent flurry of controversy intact, albeit a leaner company thanks to asset sales.
Chesapeake has sold $7 billion in assets this year in an effort to cut its debt to $9.5 billion by year-end, Dow Jones reported last week. Chesapeake shares jumped on the news.
Longnecker worked at Deloitte at the time the Enron scandal unfolded, testifying in court against Enron on their pay practices. He was also a member of a team working with Enron after Stephen Cooper -- a well-known turnaround expert -- took the reins at Enron as CEO. Longnecker helped Cooper with issues facing the new Enron and its subsidiaries in the scandal's fallout.
He now heads up Longnecker and Associates, a large Houston-based boutique consulting firm that specializes in executive compensation and corporate governance.
When Enron first started, Ken Lay "was actually one of my heroes," said Longnecker. However, they went from being an amazing company to one being "too big for their britches".
"They started reading some of their own press releases and got much more aggressive," Longnecker commented. "When you're making so much money, you start believing you can do just about anything."
In Longnecker's view, the comparison between Enron and Chesapeake doesn't wash, except in one area – the similarities between Archie Dunham, the former ConocoPhillips Chairman and CEO who joined Chesapeake as an independent non-executive chairman.
The article is a good read.  Check out the rest of it here.

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