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In the company's fat days, Fastow earned a reputation as a money wizard who constructed the complex financial vehicles that Enron drove on the road to explosive growth. Skilling wanted an "asset-light" company that could rapidly exploit deregulating markets for energy, water, broadband capacity and anything else that could be traded. So beginning in 1993, Fastow created hundreds of "special-purpose entities" designed to transfer Enron's debt to an outside company and get it off the books--without giving up control of the assets that stood behind the debt.
The challenge for Enron was to enter the burgeoning deregulated energy markets without sacrificing its credit rating by carrying too much debt on the books. So Fastow got creative. He tripled his staff, to more than 100, hiring various banking experts and giving them the task of selling and buying capital risk. "They were all young kids, 28 to 32, with great pedigrees, and they started coming up with these fancy derivatives," says Houston lawyer Tom Bilek, who interviewed dozens of former Fastow associates before suing Enron's management. "But Fastow was the boy genius setting all these SPEs up."
The people who sat across the negotiating table from Fastow as he pitched Enron's deals, and the people who worked with him, were never as impressed with him as they were with his boss and mentor, Skilling. It was Skilling who provided the strategic vision behind Enron, who transformed its old gas-pipeline culture into a swaggering, rule-breaking, dealmaking cult that ultimately mislaid its analytical skills and perhaps its moral compass. Skilling, a Harvard M.B.A. and former McKinsey & Co. consultant, had a high-wattage intellect that always impressed. Even when he was a student, people who met him knew he would do something big.
Fastow was never considered a big man on campus, not even at his suburban New Jersey high school. A teacher there remembers Fastow only as a slacker who tried to talk him into raising his grades. Hardly anyone at Northwestern University's Kellogg School of Management can even recall him from his years as an M.B.A. student. The response is similar at Tufts, where he studied Chinese and economics as an undergrad and played a little trombone and tennis on the side. Most Enron employees didn't know who he was until relatively recently. As head of Enron Capital Management--his job in 1997 and '98, when he was named CFO--he wielded his power across a very narrow band. In contrast to the avuncular Lay and the brilliant Skilling, Fastow was a PowerPoint executive whose number-crunching talent far exceeded his managerial and people skills. Indeed, when Fastow was charged with running an actual business--he was named managing director of Enron Energy Services in 1996--he botched it, and Skilling had to reel him back to finance.
In the hallways, colleagues respected and even feared Fastow's power--but not his presence. A former executive says he was never sure what Fastow was thinking other than how a particular project would affect his career. But, in the words of another former Enron manager, "he was Skilling's fair-haired boy."