Don’t get fooled by the look and the reputation. Beneath it all, there may be fraud.

That’s the impression I got after finishing “Lights Out: Pride, Delusion, and the Fall of General Electric” by Thomas Gryta and Ted Mann.

When I just started reading business books, Jack Welch was all the rave. He was a model CEO and a legend. Under his leadership, General Electric (GE) not only was the most valuable company in the US, but also reached the status of mythology. At the time, GE was too big and too important to fail. The company’s products and services were everywhere. Adults wanted to work at GE and have their next generations do the same. Quarterly earnings never disappointed. The stock kept rising and the dividends kept flowing every year. GE was the pinnacle of business management and synonymous with American success. Everything about the company screamed unreal magic.

Unreal right until reality caught up to the management and revealed the mess beneath the surface. And that’s what this book is about.

“Lights Out” deftly chronicled the downfall of GE through the most four recent CEOs: Jack Welch, Jeff Immelt, John Flannery and Larry Culp. The stories revolved around how far Jack Welch and Jeff Immelt were willing to go so that they could inflate earnings and please investors. There were questionable accounting tricks that would have been fraudulent and illegal today. Billions of dollars went to business deals whose sole purpose was to create positive growth on papers. Some of these deals were so bad that they haunted GE for years to come.

In almost, Welch and Immelt, as CEOs, had unchecked power. They called the shots and operated largely freely from the oversight of the Board. Executive compensation is a hot topic for debate, but none took it as far as the two long-serving CEOs of GE. These men received lavish royalty-like privileges, including ungodly monetary packages, flying a GE jet everywhere and having a secondary plane follow on domestic routes in case of emergencies.

Yet all they did was to drive GE to the ground.

At its peak, the company’ valuation exceeded $600 billion. Today, GE is worth $115 billion, 5% of Applet and a shell of what it once was. There was no more AAA credit rating. White collar talents prefer working at tech companies. While the brand GE is still there, the myth is long gone.

In short, I was happy with “Lights Out”. I am not smart enough to read mind-twisting content. So I appreciate the authors made it so easy to follow. I am also grateful for the painstaking research and numerous interviews over six years. What Gryta and Mann puts to paper, the account of jaw-dropping mistakes at GE, offer great lessons to current and upcoming CEOs, as well as a reminder that we all should look deeper beneath the surface.

“Rank-and-yank worked well for GE’s acquisitions, providing a formula for trimming fat and squeezing profits out of the operations. But some managers didn’t see it as helpful, especially after it had been used for a few years and some competent employees were ending up in the bottom 10 percent. You can trim fat only for so long. Also, some thought that the policy made workers fight each other for survival and inhibited managers’ ability to bring their workers together to operate as a team for the good of the company. One manager tried to subvert the system by putting an employee who’d recently died in the bottom 10 percent of the ranking list in order to save another employee’s job.”

“The board had largely followed the chairman’s lead. One newcomer to the board under Welch was surprised by the CEO’s command of the boardroom and the sparse debate among the group. Confused by how the meeting transpired, the new director asked a more senior colleague afterward, “What is the role of a GE board member?”

“Applause,” the older director answered.”

“Nevertheless, like Welch, Immelt had no problem trusting his gut. But it could be a weakness. When deciding on a deal or a move into a new line of business, his peers said, he rarely strayed from his initial position, and being presented with contrary evidence by internal analysts often visibly annoyed him. Immelt had a tendency to blow off bad news.

“That’s just your opinion,” he would say. “You’re not looking at it right.”

“Immelt made no secret of his distaste for waiting. Interruptions in a meeting from a ringing cell phone produced serious scorn: “What is this?” he would growl at the perpetrator with a sharp glance that conveyed a stinging disapproval. When flying the company helicopter into Crotonville, he would often have a black car waiting to take him from the helipad to the front door—a distance of several hundred feet.”

“It had taken two corporate jets to take Jeff Immelt around the world. For much of his career, the famously globetrotting chief executive often had an empty business jet follow his GE-owned Bombardier or Gulfstream to far-flung destinations, just in case there was a mechanical issue that could lead to delays.”

“One of those tricks was the Edison Conduit, a massive special-purpose entity that was technically independent of GE and not on its balance sheet. The problem was that the Edison Conduit was controlled by GE and guaranteed by GE Capital, meaning that GE carried all the risk, while investors didn’t even know it existed.”

“The Edison Conduit, however, had another, more important purpose: it was used to buy assets from GE Capital at prices higher than the recorded book value, creating gains that could be used to improve earnings. Of course, GE wasn’t transferring the risk of owning the assets, so it was really selling them to itself to produce earnings. But at the time, this wasn’t an accounting violation.”

“In 2002, the Sarbanes-Oxley Act was signed into law, bringing sweeping changes to corporate governance and internal company controls. It enacted more accounting scrutiny, increased disclosures, and higher penalties for fraud, and it also required that executives vouch for the results they reported. GE’s ability to manipulate its reported profits was greatly diminished.

“As one GE board member said, “The worst thing to happen to Jeff wasn’t 9/11. It was Sarbanes-Oxley.”

“The rigorous protocols of the banking industry also bore little resemblance to the customs that prevailed at GE Capital. Like the parent company, GE Capital’s system for evaluating and monitoring deals was rooted in personal accountability more than enterprise risk.

A GE compliance official hired to help deal with the incoming attention from the Fed supervisors asked what Capital’s standard protocol for extending a new line of credit required. What chain of command signed off on the deal? What committee reviewed it? These were questions that any bank would have answered easily. But at Capital, the new official eventually learned, there was no concrete protocol.”

“One former GE executive who left to become chief financial officer at another company quickly learned about the holes in his GE education. This executive had never had to think about cash…Not making payroll was a totally foreign concept to this executive. He’d had no idea that his job included keeping an eye on the daily management of money moving in and out and around the company.”

“Some were not only unprepared for their roles but also unfamiliar with basic finance concepts, according to people inside the business at the time.

During a weekly credit meeting, a new senior manager asked about EBITDA, the finance acronym for “earnings before interest, tax, depreciation, and amortization.” Removing those items from the analysis provides a better comparison of two companies, and the resulting figure can be a proxy for cash flow. The executive wasn’t raising concerns about the group’s estimates or calculations. Rather, he’d never heard the term and just wanted to know what it was”

“Welch had once told shareholders that the company’s talk of setting “stretch goals” for its performance “essentially means using dreams to set business targets—with no real idea of how to get there.”