Enron was a corporation that reached heights unknown, only to watch it fall apart from the inside out based on a foundation of falsehoods and cheating. Enron established a business culture that flourished on competition and was perceived in society as an arrogant corporation, mainly because of its corporate leadership. The fairytale of Enron actually ended as a nightmare with it destroyed by one of America’s largest bankruptcies in history. The demise of Enron impacted the livelihood and futures of numerous employees, their pensions, and in due course impacted Wall Street in a significant way. Even people today are amazed at how such a powerful company met its demise so rapidly. Enron’s end was a product of greed when certain executives of Enron were not eager to accept the failure of their company. The company utilized mark-to-market accounting that detailed the projected impending profits from a long-term deal (Lawry, 2015, p. 28) The results of the deals did not generate revenue as anticipated, but tremendous loss instead. This resulted in Enron accumulating enormous amounts of debt that they attempted to keep classified from the public. Ultimately the truth came to fruition.
Kenneth Lay, former Chairman and CEO, and Jeff Skilling who was also a CEO and COO of Enron, had the major part in Enron when it collapsed and went bankrupt. Because of deregulations Ken Lay enter Enron in 1985 through a merger a vast network of natural gas and pipeline. Later, Enron grew into an energy trading company which was worth $68 billion in 2000. Lays family was poor, which made him ambitious to earn wealth regardless of the path he takes, hence, unethical professionalism at Enron. Enron took advantage of his decision to let gas prices float on the market. Rich Kinde found out about Enron’s oil scandal in 1987 by the misappropriation of
He was the one who hired Skilling after a similar scandal in the 1980s nearly derailed the company, never concerned with ethics, only profits. Lay even sickeningly and psychotically compares his and Enron's criminal behavior, and the criticism of it, with the 9/11 attacks. All three started dumping their stock based on their most inside information months before the company tanked, and this forms the bases of the cases against Skilling and Lay, which are underway. Fastow opted to fink out on his bosses, after they set him up as the fall guy. If this film does not prove, once and for all, that the glorious myth of the free market is a fraud, nothing will.
Enron Corporation’s failure in the year of 2001 has become a depiction of unethical corporate behavior for years to come. After having watched Enron: The Smartest Guys in the Room; I found many organizational communications course concepts could be brought to our attention within the documentary. To further our understanding, I will offer my insight as to how class-related concepts connect with the documentary by discussing how Enron developed strong organizational values by identifying certain heroes and their stories that developed their sense of strong risk taking as well as discussing Enron’s “rank and yank” system that can be asserted with F.W. Taylor’s work within
CEO Kenneth Lay was a very smart man who always thought ahead of the curve. In his search for new opportunities, he started thinking about the deregulation of energy markets, particularly the natural gas market. Then in 1985, Lay eventually founded Enron in Houston, Texas. This was the result of merging two relatively small regional natural gas pipeline companies: Houston Natural Gas and InterNorth.
Kenneth lay, the founder of Enron, did not start his life as a deceiving criminal. He was born in Missouri in 1942. He went to school at the university of Missouri where he got a master’s degree in economics. After serving briefly in the us navy he got into the Gas business starting a career working for Exxon predecessor Humble Oil & Refining. He quickly moved up the ladder and found himself as president and CEO of Houston Natural Gas Co in 1981. Four years later his company merged with InterNorth, a pipeline company from Nebraska, and Enron was born. Kenneth Lay was made CEO of Enron not long after the merger. (1)
Former chair financial officer Andrew S. Fatsow pleaded to two counts of conspiracy. Fatsow was sentenced to six years in prison (WashingtonPost, 2006). Michael J. Kopper former top aide to Fatsow pleaded guilty to two counts of conspiracy and was sentenced to three years and one month in prison (WashingtonPost, 2006). Former chief accounting officer Richard A. Causey pleaded guilty to one count of securities fraud. Causey was sentenced to five and a half years in prison (WashingtonPost, 2006). Andrew Fatsow, Michael Kopper, Richard Causey all testified against Kenneth Lay and Jeffery Skilling. Enron founder and former chairman Kenneth Lay was convicted on ten counts of fraud, conspiracy, and false statements to banks. He died six weeks after
Even though records show executives of the company made hundreds of millions of dollars and was going in the right track the successful corporation collapsed, and cost investors as much as seventy billion dollars its shares trading for about $90 each. Furthermore, Lay was convincing his employees to hold on to their stocks and purchase even more. Meanwhile, executives were selling their stocks. Enron executives learned that they faced a major problem for hiding and allowing inflating, the offshore and loose of the company to happen.
During 2001, Enron’s financial condition deteriorated rapidly after many of the company’s SPE transactions unraveled; in December 2001, Enron filed for bankruptcy.
Lucas and Koerwer (2004) wrote, “every single thing that Enron did had shades of dirty play associated with it”. Ken Lay would say, "I always try to hire the best people for
Enron’s annual stockholder meeting in January 2001 was a study in corporate egotism. Executives met at a San Antonio, Texas hill country resort, and champagne and cigars were free for the taking. At this meeting, Lay boldly asserted that he expected Enron to become “the world’s greatest company.” On February 5, special bonus checks worth tens of millions of dollars were prepared for Enron executives. However, in what might have been the first outward sign of the trouble to come, Lay resigned as CEO in February 2001, keeping his position as chairman of the board, while Skilling was tapped to be his replacement.
In 1990, Lay hired Jeffrey Skilling. Skilling’s job was to create a new business plan to get Enron out of the debt it had incurred during the merger of Houston Natural Gas Company and InterNorth. Skilling, who had a background in banking as well as asset and liability management, quickly rose to the top becoming COO in 1996 and CEO in 2001. One of Skilling’s business ideas was to create a “gas bank” for which Enron could buy gas from a network of suppliers and sell it. Enron would guarantee both the supply and the price to its consumer assuming all risks and charging fees for the transactions.
Enron incurred massive debt as a result of the merger which led to it losing exclusive rights to its pipelines. Enron at this point had to come up with a new innovative business strategy in order to survive. CEO, Kenneth Lay hired services of McKinsey & Co. to aid in the process of developing a business strategy. Jeffrey Skilling, a young consultant was assigned with the responsibility. Skilling proposed a revolutionary solution to convert operations from energy supply to energy trading.
The company Enron was formed in 1985 after two natural gas companies, Houston Natural Gas and InterNorth merged together. Kenneth Lay, former chief executive officer of Houston Natural Gas was named CEO of Enron and a year later, Lay was assigned to the chairman of Enron. A few years later, Enron launched a website to allow customers to buy stock for Enron, making it the largest business site in the world. The growth of Enron was rapid; it was even named seventh largest company on the Fortune 500 list; however things began to fall apart in 2001. (News, 2006). In the third quarter of that same year, Enron posted an enormous loss of over $600 million in four years. This is one of the reasons why one of the top executive resigned even though he had only after six months on the job. Their stock prices fell dramatically. Eventually, Enron filed for bankruptcy protection. This caused many investors to lose money they had invested in the company and employees to lose their jobs and their investments, including their retirement funds. The filing of bankruptcy and the resignation of one of the top executives, also led to an investigation by the U.S. Securities and Exchange Committee, which proved to be one of the biggest scandals in U.S. history. (News, 2006). All former senior executives stood trial for their illegal practices.
The roots of the lies start with former Enron CEO Kenneth Lay. This man helped bring together a number of smaller energy companies, namely InterNorth International and