Every once in a while, Bob Droubi spots a familiar face at his Mediterranean Grill just around the corner from the blue glass and steel office tower that houses what's left of Enron, the nation's biggest corporate bankruptcy.
"I say, 'Where have you been? We've missed you,' " says Mr. Droubi, co-owner of the restaurant in downtown Houston. The responses by Enron's workers, he says, convey a simple message: "We've been trying to keep the company alive."
Five months after Enron stunned the world with its sudden collapse, both the energy firm and its accountant, Arthur Andersen, are still fighting to pull out of corporate death spirals. In Andersen's case, the battle became even tougher last week after its negotiations to avoid a felony conviction failed. The US Justice Department is now preparing for a May 6 trial in Houston.
At the same time, the scandal's ripple effects beyond those two companies have so far been limited. Congress has sent little Enron-related legislation to President Bush, for example. And the nation's energy industry centered largely in Enron's hometown of Houston are forging ahead unscathed.
After the hurricane of headlines, some people thought the Enron scandal might knock rambunctious Houston off its feet. But, that hasn't happened. Companies such as Dynegy and El Paso are expanding, and many ex-Enron employees are finding jobs elsewhere.
"The short-term impact was serious. I mean, this was the premier company in Houston and Ken Lay was going to be the next mayor. But all signs point to the fact that this scandal is going to have very little lasting impact," says Stephen Klineberg, a sociologist at Rice University in Houston.
Even the energy-trading business, which Enron once dominated, is back up and running with the New York markets and companies filling the void. "One thing we can learn from the collapse of Enron is how durable and flexible American markets now are," says Bill White, president and chief executive of Wedge Group, a Houston investment firm. "It has not wrecked the Houston economy or had severe negative Impacts on the actual businesses in which Enron was engaged."
This may be why little has happened in Washington. Congress, after heavily televised hearings, seems have lost a lot of its enthusiasm for post-Enron reform. This winter, for example, there were at least 15 bills introduced in both the House and the Senate. Some called for a special counsel to investigate Enron, some for accounting reform.
One of those bills, introduced by Sen. Christopher Dodd (D) of Connecticut, would have prohibited accounting firms from providing consulting services to an audit customer. The fate of that bill is typical of what has happened to others: It has stalled along party lines. "We pretty much need a bipartisan bill because things are pretty much 50-50 here," says a Senate staffer. When it comes to accounting reforms, lawmakers may end up letting the Securities and Exchange Commission (SEC) figure out how to overhaul the profession.
One bill that may pass has to do with retirement plans. Among other things, it would allow companies to provide more information and actual help to their employees about their investments. For example, companies such as Fidelity Investments, which offer 401(k) plans would be allowed to give one-on-one retirement planning advice. And, employees will be able to use pre-tax dollars to pay for such investment advice.
While Washington debates, Arthur Andersen is fighting for its survival. Last week, it was expected to plead guilty to a charge of obstructing justice and then be put on the corporate equivalent of probation.
But at the last minute those negotiations broke down, apparently because Andersen felt it would prevent the firm from working in several states.
In fact, state attorneys general remain active in pursuing the firm. Last week, the Connecticut attorney general, Richard Blumenthal, filed a lawsuit against Andersen for its role in the state trash authority's loss of $220 million in a failed trash-to-energy scheme. The Connecticut attorney general is also investigating the firm over some other business failures in the state.
Even if Andersen is successful at defending itself, accounting experts say, it's still not clear that the firm will continue to exist. It is still experiencing a significant outflow of customers and partners, especially overseas. "They can't audit international companies unless they have people in those places," says Ed Ketz, an associate professor of accounting at Pennsylvania State University's Smeal College of Business.
Enron, which is also under investigation by the Justice Department, is also steadily shrinking.
The company has already sold its energy-trading business, is looking for more modest corporate digs, and has plans to sell or shut down anything that doesn't relate to its natural-gas pipeline business. A new name is even in the works to give its tainted image a fresh coat of paint.
According to bankruptcy documents, the company is losing an employee per hour. This is not a surprise to Mr. Droubi. Over dripping gyros and chicken shawarma, he listens as employees say they feel bad that they are still around when others are not.
But no matter how much sympathy Droubi has for these current employees, it's not enough to restore his confidence in the company's financial strength.
"They no longer have credit here," he says of the catering side of things. "It's all COD now."