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.
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
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Jumping right into the summary then. Enron was one of the most successful corporations in America during its prime. Marketing electricity and other commodities, as well as, providing financial and risk management services to other companies were the main types of business that Enron conducted. However, Enron’s successful appearance was found out to be a façade, when it came out that the corporation was making a plethora of unethical business moves. Once the corporation’s actions became public, Enron’s fall from grace quickly followed. (Johnson, 2003)
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.
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.
Enron was a company that operated one of the largest natural gas transmissions networks in North America. At the top of its game, Enron was a successful multi-billion dollar company that marketed electricity and natural gas. Enron also provided financial and risk management services to consumers around the globe. Because of its success, Enron left many people astonished when it declared bankruptcy in December 2001. Twenty thousand employees were left without jobs and most had lost their entire life savings due to investing it in the company’s stock.
In 2000 Enron was the world’s leading corporation in selling natural gas with an estimated worth in sales of around one hundred billion dollars and the company showed only signs of progressing. Within one year the company went completely bankrupt and forty of their top employees were arrested or are in jail awaiting trials. How can a multinational corporation with steadily increasing revenue take such a drastic fall into bankruptcy and how did no one see this coming? In the end Enron knew exactly what was in their future and hid it from the public by allocating their debt and with a loophole in their accounting, it turned out to be one of the biggest cover ups in the stock markets history.
The Enron scandal was a financial scandal that was revealed in late 2001. After a series of discoveries involving irregular accounting procedures which could be turned in as fraud, went on throughout the 1990s, involving Enron and its accounting firm Arthur Andersen. Enron stood at the verge of falling into the largest bankruptcy in history by mid-November 2001. An attempt by a smaller energy company, Dynegy, was not feasible. Enron filed for bankruptcy on December 2, 2001. As the scandal was shown, Enron shares dropped from over $90.00 to just pennies. As Enron had been considered a blue chip stock, this was event came as a surprise to all and was an overall disaster in the financial world. Enron's downfall happened soon after
In 1985, Houston Natural Gas and InterNorth, a natural gas pipeline company, merged, and Lay became CEO of both houses. In 1986, after many changes and more growth, the firm changes its name to Enron and relocated to Lay’s hometown of Houston, Texas. At this time Enron was both a natural gas and oil company. The company specialized in the moving of natural gas through its pipelines, extending thousands of miles across the continental United States. As the firm continued to flourish, it reformed its commercial approach by becoming a leading producer and distributer of energy in both the United States and the U.K., as well as becoming more involved in the trading market. Ambition and determination truly carried Enron to new heights, helping it to become one of the most powerful and innovative companies in the United States, even being “voted Most Innovative among FORTUNE'S Most Admired Companies” for “six years running” (Helyar). However, with much success, temptation arose, and good intentions were led astray. Damaging arrogance, risky behavior, and deception ultimately warranted the demise of the mighty Enron.
Enron Corporation is the largest energy-trading located in Houston, Texas. It was founded by Kenneth L. Lay in 1985. Enron has been form through the merger between Houston Natural Gas and InterNorth Incorporation and initially named it as HNG/Inter-North Incorporation, before renames it as Enteron. In 1986, the company name has been shortened to Enron Corporation. At the beginning of the operation, Enron only involved in the transmission and distribution of electricity and gas throughout the United States. After that, Enron has expanded the business to information and communication, and machine metal industry. The company has providing services and products that related to natural gas, oil, broadband, pulp and paper, water as well as electricity and has been distributed it worldwide. Besides that, Enron involved in developed, created, and operated power plants and pipelines. In 2000, the annual revenue has been reach $100 billion and it has lifted Enron as the seventh largest natural gas pipeline system in the US and sixth largest energy company in the world. Enron has acquires 41 companies and has been considered as the most innovative company for six consecutive years. However, due to fraud scandals that involving its accounting firm which is Arthur Andersen and Enron’s managements, Enron has been announces bankrupt in 2001.
Imagine that we were stockholders of one of the biggest company, and our stock value has been on the rise and is now up to almost 100 dollars a share, but one day, our share value drops below one dollar. This happened to shareholders of Enron. The total debt amounted to over $ 16 billion, which was the largest corporate bankruptcy in American history. Shareholders lost 60 billion dollars within a few days, 4500 employees lost their jobs, and the employees lost billions in pension benefits. I had never heard the name of Enron nor Enron’s scandal until I watched a film, “Enron: The Smartest Guys in The Room,” but I realized the Enron scandal affected the whole of the business in the United States.
Enron Corporation was an energy company founded in Omaha, Nebraska. The corporation chose Houston, Texas to home its headquarters and staffed about 20,000 people. It was one of the largest natural gas and electricity providers in the United States, and even the world. In the 1990’s, Enron was widely considered a highly innovative, financially booming company, with shares trading at about $90 at their highest points. Little did the public know, the success of the company was a gigantic lie, and possibly the largest example of white-collar crime in the history of business.
Enron shocked the world from being “America’s most innovative company” to America 's biggest corporate bankruptcy at its time. At its peak, Enron was America 's seventh largest corporation. Enron gave the illusion that it was a steady company with good revenue but that was not the case, a large part of Enron’s profits were made of paper. This was made possible by masterfully designed accounting and morally questionable acts by traders and executives.
Ethics in the business world can often times become a second priority behind the gaining of profits and success as a company. This is the controversial issue that led to the Enron scandal and ultimately the fall of this company. Enron Corporation was an energy company, and in the peaks of their success, they were the top supplier of natural gas and electricity throughout America. Enron Corporation came about from a merger between Houston Natural Gas and InterNorth. Houston Natural Gas was a gas providing company formed in Houston during the 1920’s. InterNorth was a company formed in Nebraska during the 1930’s and owned one of America’s largest pipeline networks. In 1985, Sam Segnar, the CEO of InterNorth bought out Houston Natural Gas for $2.4 billion. A year later in 1986, Segnar retired and was replaced by Kenneth Lay, who renamed the company and created Enron. Enron was the owner of the second largest pipeline in America that measured over 36,000 miles. The company was also the creator of the “Gas Bank”, which was a new way to trade and market natural gas and served as an intermediary between buyers and sellers. As the company continued to develop, it became more of a trader rather than a producer of gas. This trading extended into coal, steel, water and many other areas. One of Enron’s largest successes was their creation of a website called, “Enron Online” in 1999, which quickly became one of the top trading cites in the world. By the year 2000 Enron as a company was
Enron was once a very large and powerful company that was admirable to many but now it is the focus of many examples on what not to do in business. The poor corporate governance system in place at Enron not only caused the company to fail but it also ruined many people’s lives. People had the idea I their head that Enron was too big to fail but that kind of assumption should never be made about a company. Enron is an example of a company that appears to be following all the rules from the outside but a deeper look reveals all that they had been doing wrong.
Enron was founded in July of 1985. Enron was an electricity and natural gas company which was a fortune 500 company and it was ranked the sixth largest energy company in the world. Enron’s stock went from a peak of $90.75 to $0.67. This was very detrimental to stockholders. Enron’s top executives sold their stock a long time before the stock price fell. A lot of lower level employees could not sell their stock because of deals they made with the company. This later caused a lot of these employees to lose their life savings and everything they had worked for. Enron used a very complex accounting method to trick the stock market. This method was called “mark to market” accounting. Enron used this method of accounting to predict and project their earnings in a long term period. These earnings were projected based on the long term energy contracts Enron was going to make. This could have been money that was not made at that point. This made Enron’s stock price skyrocket at a very fast pace, making a lot of employees and general public invest in the stock. Enron stock seemed to be a very secure and profitable investment which would make people lots of money. The Fortune 500 company went down very quickly. In August of 2001, the CEO of Enron, Jeffrey Skilling resigned. He randomly resigned and a lot of suspicions arose. His resignation was described to be because of personal reasons.