Enron Essay

1885 Words Jan 21st, 2008 8 Pages
As Bethany McLean and Peter Elkind portray in The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, there was a chain-reaction of events and a hole that dug deeper with time in the life-span of, at one time the world's 7th largest corporation, Enron. The events were formulated by an equation with many factors: arbitrary accounting practices, Wall Street's evolving nature and Enron's lack of successful business plans combined with, what Jeff Skilling, CEO of Enron, believed was the most natural of human characteristics, greed. This formula resulted in fraud, deceit, and ultimately the rise and fall of Enron.
Kenneth Lay created Enron in 1985 as a result of the merger of Houston Natural Gas and Internorth. Within a
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Next came California's rolling blackouts caused by Enron's traders. By turning the power off and on in California, they could control the price of electricity, essentially stealing people's money. Because they could manipulate the price, they made hefty bets on it, and in turn made over $2 billion dollars for Enron. Just before the fall of Enron, the insiders sold off nearly $1 billion dollars prior to the annunciation of the bankruptcy of Enron. What caused so many executives and employees to behave in such a fraudulent way? As Skilling put it, the biggest motivator for humans is money. Enron's executives received large quantities of stock options, motivating them to manipulate earnings which would cause an increase in the stock price. The nature of Enron's executives also played a big role in influencing employees to display similar characteristics of aggression, arrogance, greed and dishonesty. Executives at Enron were known to take extreme dirt-biking trips to places like Mexico, where they could dangerously travel 1200 miles of rugged terrain. Stories of broken bones, stitches and flipping jeeps became legendary at Enron, and fed the macho personality of the employees. Top management gave its managers blank orders, to "just do it" (60). In turn, employees attempted to not only crush outsiders, but eachother. Skilling encouraged this behavior, saying "he wanted them to

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