John E. Olson, a mild-mannered energy analyst who refused to recommend investing in Enron Corporation, a stand that got him fired by Merrill Lynch but that later won him widespread acclaim during one of the worst financial scandals in U.S. history, died on Dec. 9 in Houston. He was 83.
His wife, Linwood Olson, said his death, at an assisted-living home, was from lung and bone cancer.
For much of his career, Mr. Olson was a widely admired but low-profile expert in the energy sector, consistently ranked among the nation’s best by industry publications like Institutional Investor. He worked for a string of blue-chip investment banks before landing at Merrill Lynch in 1992.
By then, his skepticism of Enron, an upstart energy-trading company, was well known and grudgingly respected by the investment-banking side of the business.
A company like Enron should be growing by 10 percent a year at most, he said; instead, Enron was regularly reporting gains of 15 percent or more. Mr. Olson also had questions about the company’s financial reporting that its chief executive, Kenneth Lay, and chief operating officer, Jeffrey Skilling, refused to answer.
But as government deregulation eroded the wall between advisers like Mr. Olson, who evaluated corporate performance, and the bankers who sought to win those same companies’ business, the pressure mounted for him to put his thumb on the scales. He would not, even as his colleagues and analysts at other firms jumped on the bandwagon.
That did not sit well with Enron, whose leadership took a scorched-earth approach to perceived enemies, whether they were other energy companies or investors refusing to kowtow.
“There was a strong mandate, unwritten, unspoken, at Enron that if you, the investment-banking house, ever wanted to do business with Enron, your analyst had to have a strong buy on the stock,” Mr. Olson told The New York Times in 2002. “I was continually at war with investment bankers.”
Things came to a boil in 1998, when Enron announced a new round of equity financing and pointedly excluded Merrill Lynch from the banks involved. In a call to one of Merrill Lynch’s executives, Enron’s chief financial officer, Andrew Fastow, made it clear that Mr. Olson was the reason.
A few days later, Mr. Olson recalled, his boss, Andrew J. Melnick, walked into his office, shut the door and said, “How could you do this?”
Mr. Olson was fired.
He quickly found a new position with Sanders Morris Harris, a Houston investment firm. From there, he watched as Enron’s stock continued its meteoric rise — and then, in the late summer of 2001, as it began its spectacular fall.
While regulators and the company’s accountants at Arthur Andersen looked the other way, Enron had played a series of shell games to record phantom profits and hide some $6.5 billion in debt.
By the time the company filed for bankruptcy in December 2001, its stock price had fallen from $90 a share to less than $1.
Mr. Lay, Mr. Skilling and Mr. Fastow went to prison. Merrill Lynch agreed to pay a $100 million fine. And Mr. Olson became a hero.
He spoke to standing-room-only crowds and testified before Congress. But he never tried to cash in on his prescience, and he never claimed to have figured out Enron’s fraud — he knew only that something hadn’t smelled right.
The real issue, he said, had been the failure of government regulators like the Financial Accounting Standards Board and the Securities and Exchange Commission to force open the company’s books.
“When you have so many moving parts like Enron had, not even an analyst worth his salt could have figured the company out,” Mr. Olson told The New York Times in 2002. “What would have helped is full disclosure by Enron. Accounting mandates by the F.A.S.B. and the S.E.C. would have saved the company from itself and from bankruptcy.”
John Erik Alexander Olson was born on July 1, 1942, in Manhattan and grew up in Larchmont, N.Y., in Westchester County. His mother, Zembra (Holmgren) Olson, managed the home; his father, Sydney Olson, was a reporter for Time and Life and later an advertising executive with J. Walter Thompson.
After graduating from the University of Pennsylvania in 1964 with a bachelor’s degree in English and American civilization, he received a master’s degree in business administration from the Wharton School two years later.
He served for five years in the Army and the Air National Guard as a helicopter crew chief.
Mr. Olson began his career as an analyst with Smith Barney, and later worked for Drexel Burnham Lambert, First Boston and Goldman Sachs, developing a reputation as a cleareyed observer of the energy sector.
He married Linwood Liddle in 1969. Along with her, he is survived by their children, Erik Olson and Kristen Olson Lyons, and three grandchildren.
Mr. Olson retired from Sanders Morris Harris in 2014. Among the mementos he kept in his office there was a framed article from U.S. News & World Report in which he was quoted, once again, expressing skepticism about Enron’s accounting.
The page had been given to him by a Merrill Lynch executive, Donald Sanders, who had received it from Mr. Lay. In the margins, Mr. Lay had written, “Don — John Olson has been wrong about Enron for over 10 years and is still wrong. But he is consistant. Ken.”
“You know that I’m old and I’m worthless,” Mr. Olson recalled telling Mr. Sanders, in an interview with The New York Times. “But at least I can spell ‘consistent.’”
Clay Risen is a Times reporter on the Obituaries desk.
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