WAYNE G WICKMAN, third generation Houstonian and owner of the city's biggest BMW dealership - 'just a nine-iron chip from Enron headquarters' - explains how business was conducted in the good old days.

'Those Enron boys, they'd call and say, "I'll have the new BMW M5", and if I could get them the right colour and model by five o'clock, they'd come right over and drive it away that day.'

I suggest to Mr Wickman that this sounds like one of the urban myths that have come to shroud the Enron disaster. The company's extraordinary demise has been portrayed by Congress and in the chiding US press as a morality tale about greed and hubris, and many Americans - if they are honest - are quietly rather pleased that the Texan wideboys have had their comeuppance.

But Mr Wickman certainly saw nothing wrong with hard-working traders splashing around their six- or seven-figure annual bonuses. 'I called them the thoroughbreds, those Enron dealers, because they were bred for speed. They never hassled, they were straight, a pleasure to deal with. They would sit at their desks looking at 12 screens, on the phones all day, so they really weren't interested in bargaining about the cost of a car.

' Three minutes into our conversation, I ask Mr Wickman how long it would take him to close a deal on a $75,000 top-of-the-range BMW, and he replies, 'A lot quicker than you and I have been talking.'

Business is down a little at Advantage BMW since Enron filed for bankruptcy in December, but Mr Wickman is the first to acknowledge that there are many victims far worse off than he. On going bankrupt, Enron immediately fired 4,500 in the Houston office and hundreds more in its overseas offices.

Many of them are even now losing the fight to keep their homes. Marriages have collapsed, lives have been wrecked, children displaced. Still the human toll increases, as Andersen, which failed to audit the Enron books properly, implodes with 7,500 job losses announced recently in America and 1,500 in Britain.

Not only have careers been blighted, but many staff have also seen their paper fortunes of Enron stock options evaporate. Those who have suffered most are the ones whose pension funds are based on Enron stock, which at its height was riding at more than $80, but is now trading at a few cents.

Unlike the executives who cashed in before the share price crashed, ordinary Enron employees could not sell the shares in their pension schemes until they reached 50. Strangely, many staff report feeling a reluctance to sell the shares they could have dumped, even when they sensed things were going wrong. For they were all believers - crusaders of the new economy - caught up in a collective insanity in which key business fundamentals were ignored by employees, Wall Street and all financial commentators.

'Firing up an idea machine; Enron is encouraging the entrepreneurs within,' the New York Times celebrated in 1999. For five years from 1996, Fortune named Enron 'Most Innovative Company', and the 2000 citation read: 'In the staid world of regulated utilities and energy companies, Enron Corp is that gate-crashing Elvis.' The company culture was so all-powerful that staff pushed the legal and accounting rules to the absolute limit and - according to the Justice Department investigators - beyond.

To say that Enron had a go-go corporate culture is like saying Las Vegas is a good place to go gambling. As Enron transformed itself from a worthy Texas pipeline company in 1985 into a global energy colossus 15 years later, success was celebrated without apology, and failure punished brutally.

Each year the top management completed the now notorious 'rank and yank' review, whereby high flyers were handsomely rewarded with bonuses of hundreds of thousands of dollars, while the failures - known as the 'shipwrecks' - were 'yanked' with the minimum statutory payoff. Staff even learnt to keep a black bin-liner in their bottom drawer to effect a dignified exit, for it was a point of honour in some departments that one in seven of the staff would be culled every year.

The acrid atmosphere was not helped by another management technique that actively encouraged staff to sneak on colleagues for idleness or other intolerable offences. In addition, the firm employed former FBI and CIA agents - the spooks, as they were known around the office - to run an elaborate surveillance operation, monitoring all phone calls and e-mails with special 'sniffer' search programs. Anyone found to be exchanging sensitive information with outsiders would be yanked.

Alongside this brutal approach the company was oddly paternalistic. On 'Secretaries Day',

for instance, scores of Waterford crystal vases would be handed over by the management, and employees returning from maternity leave would find a $500 cheque on their desks. On the day the Enron share price broke through the $50 mark, all employees came back to their desks to find a $100 bill.

Company concierges were on hand to deal with the mundane aspects of life such as booking holidays or picking up dry cleaning, tasks no truly focused Enron executive could be expected to worry about. Complimentary massages in the company health centre were offered six days a week, from seven in the morning till 10 at night.

Staff visiting Enron's overseas subsidiaries would be lavished with limousine service and always stay at the best hotels. As one sacked employee wistfully put it, no one travelling on business for Enron ever turned right when boarding a plane, unless of course it was a private jet.

For those who were up to the challenge and the gruelling 18-hour days, it was a lot of fun while it lasted. Enron hired the best people from the best universities from all over the world, and paid them more than the staider corporate oil companies such as Shell and Texaco, which share the southern end of downtown Houston.

It was the sort of company that threw corporate bashes at which key executives would arrive on elephants or Harley-Davidson motorbikes. Even as Enron was lurching towards bankruptcy late last year, plans were far advanced for a $1.5 million Christmas party at Enron Field, the city's superb new sports stadium, built with the company's money. The brief for the party planners was to exceed previous extravaganzas at which each department would compete to put on the best party skits, assisted by professional choreographers.

In this quick-spending culture, according to the female staff, there was a strong whiff of illicit sex about the office. Affairs were common and blatant: several executives traded their wives in for younger subordinate staff as casually as they traded energy futures. One senior executive kept on his office wall a 'Hottie' board rating the sexiness of the female staff; those thought to be sleeping with their bosses were known as the 'French Lieutenants' Women'. Two executives were celebrated around the office for their habit of having energetic lunchtime sex in view of other staff walking past their office.

Enron staff had a clear sense that they were the best, the daring innovators in a hidebound industry. They rode the Nineties triumphantly and it was only in the middle of last year that it became clear that something was seriously wrong.

'You focus too much on the numbers,' Jan Avery was told by her boss when she was fired from the international division last summer, four months before the bankruptcy. Avery was a senior executive, a qualified chartered accountant, so she still cannot make up her mind if she should take that parting shot as an insult.

After five days in the sprawling suburban hell of strip malls, office parks and choked 12-lane highways that comprise the Houston metropolitan area, Avery's elegant home is a delightful sanctuary. The house sits in a pleasant suburb far enough back from the giant highway that rings the city. It is furnished in a south-western style, and decorated with artwork she collected on her frequent trips for Enron to South and Central America and beyond.

Avery's grandmother was born on a plantation in Alabama, and there is something of the southern gentlewoman about her which she retains even after a harrowing spell in the American corporate world. In her Enron days, Avery favoured blazers and power-suits; today she is casually dressed in jeans and a pink T-shirt.

Her hair is gently hennaed, and her toenails are immaculately painted. At the age of 53, she gives off an air of slight sadness and quiet determination. She is divorced, and since she was sacked she has been living on her savings, flying her daughter back from college in Mississippi on the air miles she accrued travelling the world for Enron.

She says that she doesn't so much miss the salary, which with bonuses could reach £300,000 a year, as the thrill of a job she did actually love, even as she sensed it was all going hideously wrong. She also lost much more in worthless stock options and her pension savings.

'You know, I told a co-worker last summer, just before I was fired, that I was going to write the inside story about Enron,' she says, sinking back into the sofa in her living-room. 'I was going to call it House of Cards, but then I figured no one would believe what was going on.'

Avery has been one of the few senior Enron figures to speak out about what she saw; she is co-operating fully with the congressional and Justice Department investigators and is certain to be a star witness in the criminal trials against the key directors which now seem inevitable. The investigators raking over the ashes of the Enron empire are particularly interested in Avery's testimony because her accountancy background lends her evidence a forensic quality, or as she puts it, 'I know where the skeletons are buried.'

I mention to Avery that even after reading the accounts in the financial press about the history of Enron, I still did not understand how the company was supposed to have made all the profits it reported throughout the Nineties.

She pauses in thought, concentrating hard. 'This is what they did,' she says finally. 'They would create stories about the business, and sell them to Wall Street.'

Some of those stories would be very funny if the human toll of the Enron debacle were not so immense. One infamous episode from early 1998 concerned a visiting party of Wall Street's finest, who descended on Houston to learn about a new venture, Enron Energy Services.

Executives had misled the analysts about how far they had got with the project, though according to the Enron ethos, that was not so much a problem as a challenge. Thus, a trading floor was hastily created from scratch, complete with banks of flashing screens and fake dividing walls. Secretaries and technicians ran around the set, yelling into telephones and pounding computer terminals, 'playing' energy traders. As usual following these visits - which would typically end in a lap-dancing club in the early hours amid a confusion of suspender belts and tequila slammers - the Wall Street analysts flew back east and tipped the stock even higher.

The company started stolidly enough when Kenneth Lay founded it in 1985 with the merger of two pipeline companies, Houston Natural Gas Corp and InterNorth. Lay, the first chief executive, was a fierce champion of deregulation of the energy markets and quickly displayed a knack for tapping into the political elite of Texas to secure regulatory advantage.

But modern Enron was largely the creation of Jeffrey Skilling, a highly ambitious management consultant who was hired by Lay to transform the company into a global power. 'From the world's leading energy company to... the world's leading company' a giant banner in the lobby of the headquarters declared to everyone, for there was never anything understated about Enron's ambitions.

Skilling thought that digging for or piping oil and gas was an 'old economy' pursuit and moved Enron into the 'new economy' of dealing in energy, and all of its related activities. Soon, Skilling created what he called the Gas Bank, whereby Enron did not act just as a broker, but as a 'banker', committing to provide guaranteed quantities of gas at a set price on long-term contracts.

The company could make a fortune if it could buy the gas it was contracted to provide at a cheap enough price but the risks were huge if the market price shot up. No company had sought so systematically to exploit the slowly deregulating energy sector in this way, and Skilling was regarded by the staff as a genuine business innovator, but also as a terrible bully. Avery says she still feels disturbed thinking about him.

By 2000, 97 per cent of Enron's revenues came from trading energy, rather than finding or transporting it. The basis of the original Enron model was to make a market in gas or electricity, and then to dominate it by ensuring it had the best intelligence about price movements, and the best contacts to sell it. In the end the company was betting on the way prices would go while to a large extent seeking to control the market.

Enron liked to operate in developing countries where risk and margins were high, and where the regulatory climate was generally benign. Initially, it bought up or built generating plants in Asia, Europe and Central America, and quickly came to dominate the markets there. Soon Enron was applying the same business model to telecommunications and the internet, buying and selling broadband capacity and trying to control the prices.

It also invested hugely in the booming telecommunications sector, and like so many other large corporations, got burnt. It even sought control of the global water market, making an unsuccessful investment in Britain by buying the privatised Wessex Water.

The heart of Enron's problem was that too many of its ventures were losing money disastrously. To disguise this, a network of dubious partnerships were created with names like Jedi and Chewco casually taken from the Star Wars films, which were simply Enron vehicles for keeping ballooning debts off the balance sheet. In simple terms these partnerships would 'buy' businesses from Enron to bolster the balance sheet. In truth, numbers were simply being juggled around loss-making parts of the Enron empire, leading to an inevitable implosion once the share price began to tumble.

If anyone had any doubts, Skilling had the answer: 'In the old days, people worked for assets,' he would say. 'We've turned it round, and what we said is the assets work for people.' Skilling's popularity in the energy world was not helped by another boast, that the giant integrated oil companies such as Exxon would collapse if they did not reinvent themselves along the lines of Enron.

According to Avery and other former employees, the share price was the only figure that mattered to the directors, so contracts were entered into simply to give something to tell Wall Street about. All sorts of tricks were employed to massage the figures. Projected earnings from long-term contracts were booked in the current year to flatter the company's performance, and drive up the share price. 'It was crazy, absolutely crazy,' Avery says. 'They didn't want long-term growth or earnings strategy. The question was always, what can you give me to put on the books today?'

Stock options were the engine that drove the extraordinary fortunes of the most senior Enron executives, who earned $600 million from selling their Enron shares in the four years before the bankruptcy. Ken Lay made more than $16 million in 2001 alone; Lou Pai, former chairman of the energy services unit, made $33 million.

Skilling cashed in $66 million worth of shares in his decade at the company, though he told a congressional panel that a further $170 million of options he held were now worthless. Senators were unmoved by his plight. To the fury of many employees lower down, blocks of executives' shares were sold as Lay and Skilling were reassuring staff and Wall Street that all was well. These complaints are the basis of the insider trading allegations now under investigation.

'There seemed to be so much money around, it got quite mad,' says Vinio Floris, a Peruvian-born Enron executive, one of those sacked in the great cull of early December. He recalls one deal he was involved with in Argentina in 1999, when Enron bid $430 million for an energy business.

Later it turned out that the next highest bid had been $70 million. 'In the end, we just walked away from that business, and wrote it off. It was ridiculous. There was no due diligence, and we were just buying up pieces of crap. There was a kind of madness around.'

I met him in a sad little job-seekers office created out of unneeded space at Enron's headquarters, where computers have been left for the fired staff to try to find work elsewhere. The offer of the space is one small gesture from a company to workers who feel sorely betrayed.

Floris, who is married with two children, has been doing some consultancy work since he was laid off, but he wants a regular job. The problem is that there is now a stigma against the more senior Enron staff. Floris says Enron was an exciting company to work for and he worries that the wrong lessons will be learnt from the bankruptcy. 'Enron went belly up because of some crooked people, not because the principle of energy deregulation is bad,' he says.

Enron, humbled and much reduced in scale, is still trading in bankruptcy, but there is a desperate air around the headquarters at 1400 Smith Street. Enron's logo, with the name of the company lodged within an inclined capital 'E', was once regarded as suitably jaunty for a go-ahead business: today it has given the company its new colloquial name, Crooked E.

I notice that the 'r' of Enron on the main company plaque has worked loose and no one has got round to fixing it. With magnificently inappropriate timing, work is just about to be completed on a gleaming new $200 million, 40-storey tower across the road which was to complement Enron's current headquarters. The unfinished tower is already for sale.

Rochelle Dent, a secretary who was given half an hour to clear her desk in December, was working at the informal job-seekers centre where I met her. She is bitter about the manner of her sacking, but like many other lower level staff, she retains a strange affection for the company. It was an exciting place to work, and she regards Ken Lay as a gentleman.

When Dent's daughter was murdered in a workplace shooting he sent her a note and some flowers. 'I thought that was kind,' she says. At a more senior level Avery says the pace at Enron was so frantic that staff were locked in a frenzy, almost brainwashed. Even as she sensed the company was doomed, 'I still bought into it at one level. It was the culture of the place.'

Indeed, all over the city, people still talk of Enron as a 'real good corporate citizen', regarding its donations as generous rather than self-serving. The company's munificence was legendary, from the baseball park to the donations to Houston's outstanding privately supported art galleries to the $10 million annual donations to the United Way charities.

This munificence didn't stop at Houston. In Washington, Lay set up a dedicated lobbying operation to obtain access to those who framed energy legislation. In all, 71 senators and 187 congressmen have had to admit taking Enron money for their campaigns, and the company contributed to all the important members of the congressional committees responsible for setting energy policy in Washington.

Enron was always regarded as a Republican company, and it contributed handsomely to George W Bush's campaign and lent him a corporate jet. Lay was close to George Bush senior, who lives in Houston. But crucially, the White House refused to involve itself in a putative rescue plan when Enron was skidding into bankruptcy, despite frantic calls from Ken Lay for help.

There is now a collective sense of embarrassment in Houston following the collapse of Enron. It is a strange city, superficially brash, confident, and forward-looking, yet curiously defensive about the way America sees it. I arrive in town with the telephone number of a Houston hostess who a friend said knew all the Enron people and every other multi-millionaire in Texas.

When I reach her on the phone - on the day of her return from a trip to Paris - she is charmingly polite but adamant she will not see me. 'I'm afraid this is all too painful, just too painful. People are using Enron to trash this city. It's too bad.' She did indeed know Lay and Skilling, and she confesses that like most well-off Houston-ians, she lost money on her Enron stock. Before she politely puts the phone down on me, she says enigmatically, 'The press has got it all wrong - it'll all come out in time.'

To Wayne Wickman, the BMW dealer, Lay was a visionary and a business genius, 'a very religious man who has a lot of faith, a genuinely wonderful guy'. Wickman had seen Lay for dinner a few days before. 'I can tell you, he is devastated beyond imagination by what has happened.'

Others are not so forgiving. Some form of criminal trial now seems inevitable, for Lay has become a sort of OJ Simpson of corporate America. Skilling, who allegedly helped design the bogus partnership deals that hid Enron's liabilities, is also in legal jeopardy. Aside from any criminal charges, Skilling is already fighting 36 employee and investor lawsuits which, he has said, he expects to be fighting for the next five or 10 years.

One of the trite corporate slogans at Enron went: 'You can delegate work, but not responsibility', and by that token, Lay and Skilling would appear to be doomed. Lay's supporters have tried to suggest that he was in the background, removed from the day-to-day running of the business, but Avery disputes this. 'Lay was quick, always asking the sharp question at a meeting. There's no way he didn't know what was going on.'

But if indictments are likely against Lay, Skilling, and other directors, Avery is not at all certain they will be convicted. The overlaying webs of corporate and political power are so complex that there are immensely powerful vested interests in Houston and Washington united in their desire that the whole truth should not come out. Avery is under no illusions about what she has got herself into by agreeing to testify, a decision her friends and family warned her against.

She is trying to shed the stigma of her Enron association by being open about what she saw. Getting the truth out is part of what she describes as her own reinvention. I tell her how several Houstonians have refused to talk to me about Enron, that I sense a sort of collective code of silence has replaced the collective madness that marked the years of Enron success.

'I'll tell you why that is,' she says. 'No one wants to admit that, "gee, they really pulled one over us".'