Enron And Enron Of Enron

Enron had the largest bankruptcy in America’s history and it happened in less than a year because of scandals and manipulation Enron displayed with California’s energy supply. A few years ago, Enron was the world’s 7th largest corporation, valued at 70 billion dollars. At that time, Enron’s business model was full of energy and power. Ken Lay and Jeff Skilling had raised Enron to stand on a culture of greed, lies, and fraud, coupled with an unregulated accounting system, which caused Enron to go down. Lies were being told by top management to the government, its employees and investors. There was a rise in Enron 's share price because of pyramid scheme; their strategy consisted of claiming so much money to easily get away with their tricky ways. They deceived their investors so they could keep investing their money in the company.

Enron boosted profits and hid debts, manipulated CA and TX energy, using off the books partnerships, and pay foreign government to win contract

In 2001, Enron, the largest energy company in the U.S., collapsed after a vast creative-accounting scandal. Enron practiced a type of accounting called mark-to-market practice which it used to hide losses. Mark-to-market accounting it not illegal on its own but it was used improperly by Enron. The CFO and CEO of Enron were able to write off any losses to an off-the-book balance sheet and made the company appear financially healthy (Seabury, 2008). Investors lost $74 billion while thousands of employees lost their jobs and

The focus of the corporation soon changed direction once it was realized that investing in selling intangible assets on the market could provide easier and higher revenue returns. This type of trading on the open stock market, with little regulations is what allowed the infamous criminal acts to take place and led to one of the world’s worst bankruptcy cases in United States history. An investigation finally occurred when investors found suspicious stock prices increasing exponentially and a whistleblower raised concern that finally revealed the fraudulent operations of Enron’s top executives conspiring with multiple businesses.

Enron was a publicly traded energy company formed in 1985 by Kenneth Lay when Internorth acquired Houston Natural Gas; the company, based in Houston Texas, Enron (originally entitled “EnterOn”, but was later subjected to abbreviation), worked specifically in power, natural gas, and paper and even ventured into various non-energy-based fields as they expanded, including: Internet bandwidth, risk management, and weather derivatives. Several years after the founding of the company, Enron hired a man by the name of Jeffrey Skilling, a former chemical and energy consultant, who, upon promotion, created a team of high-level administrative employees who, by using special purpose entities, lackluster reporting of finances, and unethical accounting practices, hid billions of dollars of debt from unsuccessful arrangements and ventures from stock holders and the U.S. Securities and Exchange Commission. Enron executives achieved this scheme by using a controversial accounting method entitled “mark-to-market accounting,” which in essence, assigns value to financial commodities based on their projected market values; mark-to-market accounting is the opposite of cost-based accounting which records the price of a commodity at the purchase price. As a result of this new method, Enron’s worth skyrocketed to over $70 billion at one time, only to collapse miserably several years later—ultimately costing thousands upon thousands of people their jobs, pensions, and retirements. Enron’s employees

Interest groups in the current world serve specific agendas that either benefit or disturb the general public. This paper will review and analyze the events of the Enron Corporation in association with the electrical shortages and demand increase in California in the turn of the century. By evaluating the corporate institutions motives and agendas, a clear path will show that Enron misused its size and influenced electric companies to manipulate energy prices, in order to leverage Enron’s market share and bolster profits to cover up losses that where attributed by unethical and even Illegal activities in the past. The objective of this paper is to expose the carelessness of special interest groups to satisfy corporate greed without consideration of the general population.

Enron could become an “energy broker” in lieu of company delivering energy with the deregulation of electrical power in 1988. “Deregulation allowed Enron to be creative – for the first time, a company that had been required to “operate within the lines” could innovate and test limits.” (Sims and Brinkmann 2003) Enron went from a company with humble beginnings that has faced difficult years to an organization “where a handful of highly paid executives were able to pocket millions…” (Sims and Brinkmann 2003) With deregulation and the use of mark-to-market accounting Enron was able to legally make millions while being unethical.

When Jeffrey Skilling was hired, the company started using mark-to-market accounting which allowed the company to record potential profits and giving the appearance that the company is extremely profitable even when it isn’t. Enron continuously created deals and new projects to increase potential profits for the company and never actually making any money in the process. Skilling’s best idea was to turn Enron into a stock market for natural gas. Enron began to move towards trade of energy rather

Analysis of Enron: the Smartest Guys in the Room One of the greatest achievements of Enron: the Smartest Guys in the Room, is the documentary’s ability to so meticulously and cohesively deconstruct the corporation’s practices, from top to bottom, to illustrate even for the layman just how fundamentally illegal and reckless its leadership was. One of the reasons that the film’s title (which is based on and taken from the book of a very similar name) is so fitting, is that the sorts of business ventures that Enron pursued—be it their Blockbuster bandwidth scheme, their Dabhol power plant project, or their California energy price-gouging—required such immensely-detailed, calculated planning and maneuvering, that the notion that those at the top didn’t know

Research has shown that companies with poor financial performance and financial uncertainty are more likely to commit illegal acts (Lawrence & Weber 77). After several unsuccessful attempts to make a profit through spending billions of dollars building a power plant in India and entering the bandwidth market, Enron aggregated a debt of 30 billion (Enron: The Smartest Guys in the Room). Under high pressure to generate profit and keep the stock price up, Enron controlled the power they supplied to California residents. Enron reduced the power supply by exporting supply to other states. Consequently, electricity prices were driven up, forcing Californians to pay more. Moreover, traders at Enron realized that by simply shutting down some of Enron's

Enron was an energy company based in Houston, Texas that dealt with the energy trade on an international and domestic basis. Enron formed in 1985 when Houston Natural Gas merged with InterNorth. After several years of international and domestic expansion involving complicated deals and contracts, Enron became billions of dollars in debt. All of this debt was concealed from shareholders through partnerships with other companies, fraudulent accounting, and illegal loans. By 1989 Enron diversified into trading energy-related commodities. In a few years, Enron had become the largest merchant of energy in the United States. By 1994 Enron had

The leaders were using a goal and rewards based system to encourage the maximum potential of the traders. Conceptually this was successful, however in the State of California’s power deregulation, it was an ethical abomination. The traders used every loop hole imaginable to profit, including rolling blackouts and power plant shut downs. Raising the price of power even thought there was power for everyone, only its manipulation fed the traders ego’s and Enron’s bottom line.

Enron was formed in 1985 from the merger of two gas companies from Texas and Nebraska. Enron became the first company with all-American network of gas pipelines. In 1997 Enron bought power generating company "Portland General Electric Corp." worth $ 2 billion. Before 1997 ended, the management turned the company into "Enron Capital & Trade Resources" which became the largest American companies that trade in natural gas and electricity. Revenue increased dramatically from $ 2 billion to $ 7 billion by employees grew from 200 to 2,000 people.

Enron was formed through the merger of Houston Natural Gas (HNG) of Houston, Texas and InterNorth of Omaha, Nebraska. HNG covered the Florida and California market, their pipelines running from east to west. InterNorth catered the Iowa and Minnesota market, their pipelines running from north to south. HNG was formed in 1920, providing gas to retail customers in Houston. The company sold its retail gas business in 1920 and ventured into the gas exploration and production business. In the year 1984, HNG had $3.7 billion in assets, over $2 billion in sales and booked profits of $123 million. In 1984, InterNorth had revenues of $7.5 billion. The reason behind the merger was that InterNorth faced the threat of a buyout by corporate raiders as it had low debt and high revenues. The conservative operations and low debt of InterNorth made it a target for corporate raiders who planned to use its cash reserves and borrowing capacity to extract funds for themselves. On the other hand, HNG had borrowed heavily to expand its pipelines in the Florida and California markets. Therefore, merging with Houston Natural Gas made perfect sense as it fended off corporate raiders. In May 1984, InterNorth acquired HNG for $2.4 billion, under the leadership of Sam Segnar who was the CEO of InterNorth at that time. The negotiations for HNG were handled by John Wing and he was able to negotiate a price for HNG shares which was 40% higher than the ongoing market price.

Most of the world has heard of Enron, the American, mega-energy company that “cooked their books” ( ) and cost their investors billions of dollars in lost earnings and retirement funds. While much of the controversy surrounding the Enron scandal focused on the losses of investors, unethical practices of executives and questionable accounting tactics, there were many others within close proximity to the turmoil. It begs the question- who was really at fault and what has been done to prevent it from happening again?