Enron and Parmalat

The Italian dairy food corporation Parmalat SpA was founded by Calisto Tanzi in 1961 and grew to a global company. It had about 140 production centers, 36,000 employees and 5,000 contracted dairy farms (https://en.wikipedia.org/wiki/Parmalat). The dairy food giant defaulted on debt in November 2002 and filed bankruptcy in December 2003. It sounds ridiculous because Parmalat’s subsidiary in Cayman Islands had a $4.9 billion cash balance in Bank of America account. However, this account was falsified. Meanwhile, Parmalat also hid losses of $10 billion and increasing assets as high as $19 billion. The auditors did not show enough professional skeptism and due care during the audit.

Upon watching the documentary, one could conclude that Enron’s bosses created a culture of pushing limits and taking risks. From the movie, we understand that Jeff Skilling was known to be a nerd as well as others within Enron. It seemed as though Jeff had woken up one day and decided to change himself by wearing contacts instead of glasses, changing is wardrobe, and doing some modeling. As he changed, so did others who worked under him for the fact that they saw Skilling as their hero. With time, it has been noted that Jeff became some sort of tragic figure. He became a man who was radically different than how he portrays himself. It was known that Skilling was a huge risk taker and he often talked about, and then started to manifest in trips that he began to lead with small groups and customers that were often times dangerous. These

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.

The predecessor of Enron Corporation was an Omaha-based natural gas company created in 1930; steady growth in profits and sales and numerous acquisitions allowed Enron to become the largest natural gas company in the United States by the mid-1980s.

United States 1). During the first years of the deregulation of the electric market, under the vision and command of Kenneth Lay, who, supported by his studies of economics and the experience obtained from his work in important positions in the cabinet of government of the United States of America, decides to explore the energy industry especially in the area of natural gas. In 1989, Ken Lay hired Jeffrey Skilling, then a consultant to McKinsey & Co., to help him implement the new diversification strategy, which was successful so that by 1995 Enron was already the industry marketing leader, controlling 20% of the energy market in the United States. “Later in the 1990s, Enron used favorable Washington decisions to expand its reach, marketing a variety of other real and virtual commodities, from plastics to bandwidth.” (St. Petersburg Times, "Enron's meltdown.").

The history of Enron is described in detail in the film “The Smarted Guys in the Room”. According to the film, Enron was founded by Kenneth Lay in 1985, functioning originally as a producer and supplier of natural gas. Enron built and operated power plants and pipelines all over the United States. The company’s wealth expanded quickly due to marketing, promotional strategies and stock price. One of the important aspects noted in the film was Lay’s relationship with the Bush family. This will be described in detail later on and becomes a crucial piece of information during the California energy scandal. Enron’s traders were involved in a scandal early on in the company’s history involving the misappropriation of money and oil betting, this became known as the Valhalla scandal. Lay encouraged traders to continue these activities until the company was near bankrupt and finally the top traders involved were fired and convicted.

Enron was a Houston based energy, commodities and services company. When people hear the name Enron they automatically associate their name with one of the biggest accounting and ethical scandals known to date. The documentary, “Enron: The Smartest Guys in the Room,” provides an in depth examination of Enron and the Enron scandal. The film does a wonderful job of depicting the downfall of Enron and how the corporate culture and ethics were key to Enron’s fall. As the movie suggests, Enron is “not a story about numbers, it is a story about people.”

In 1985 Ken Lay took over a couple of big name gas pipeline companies that came together and thus the infamous Enron Corporation began. They offered a variety of services that were not limited to natural gas but also included electricity, communications, and many energy related services. Together, CEO Jeffrey Skilling, Chairman Ken Lay, and CFO Andrew Fastow were able to bring transformation to Enron. They created a multi-billion dollar Wall Street celebrity out of an electricity and gas company. There was an unusual growth spurt in Enron’s profit of about $69 billion from 1998 to 2000. This caught the attention of an anonymous

Major private financial institutions in the USA, Japan and Europe ended-up in the hands of such executives who were thus in no violation of any legislation but were in fact acting greedily and unethically, betraying the confidence of their customers. The border line between the laws and the Ethics were lost.

In 1984 Ken Lay became chairman and Chief Operator of Houston Natural Gas. It quickly doubled when it bought Florida Pipeline Company. The next year in 1985 Houston Natural Gas merged Internorth Incorporation. With the merger they both combined to own around 40,000 miles of pipeline and shortly after they changed their name to Enron. Around that time Washington was being lobbied by energy corporations to deregulate business and let companies set their own prices. Energy companies said this would not only lead to the end of monopolies but the extra competition would benefit companies and consumers. Over the next several years Washington began to lift controls on who could produce energy and how it was sold. With an influx of new suppliers

To analyze this scandal, we first need to know what happened. Enron opened as a natural gas company in Houston, Texas in 1985, founded by Ken Lay. It then formed into energy, commodities, and service company. Lay then hired Jeff Skilling as CEO; it was these two and a few other high-ranking executives that led to the failure of Enron. In short, Enron was losing money, but with the work of fancy accounting and taking advantage of free enterprise, reported huge false profits. This all came to a head in 2001 when Enron declared bankruptcy.

This report allows the facts to be known concerning the still mysterious case of Bernard L. Madoff and his longtime investment securities activities, which eventually turned into an enormous fraud of incomparable size. In this report, you will begin to understand how Bernard Madoff was able to execute such an elaborate fraud. The illegal business behavior found in this case is too numerous to count however, quite a few will be identified. In addition, the roles of the perpetrators, accomplices, and their involvement in this scheme will be made known. This fraud had such an enormous impact on the victims, we will examine several implementations that the private investors could have implemented to protect themselves. An

The ones who finally exposed the scam were Bernard Madoff’s sons, Andrew and Mark Bernard, who after they found out that the company was based on a Ponzi scheme reported it to the authorities. This resulted in the arrest of Madoff on December 11th, 2008. He was accused of fraud and the embezzling of up to 65 billion dollars. He pled guilty to all charges, including money laundering, mail fraud and making false filings, and in June 2009, Madoff was sentenced to serve 150 years in prison [6].

In 2011, Eric Ben-Artzi was working at the Deutsche Bank when he found out a wrongdoing about the overvaluation of collateralised debt obligations (CDO). After raising concerns internally, following bank procedures and policies, and after having no proper answers from its hierarchy, as the problem wasn’t solve or acknowledged, Eric had to inform the law enforcement

Enron began as an energy company in 1985. After the deregulation of oil and gas in the U.S., Enron lost its’ exclusive rights to natural gas pipelines. The CEO, Kenneth Lay then hired a consulting firm to reinvent the company in order to make up lost profits. He hired Jeffery Skilling, who was in banking, specifically; asset and liability management. Under the topic “The Beginning Presages the End”, C. William Thomas (2002) writes: “Thanks to the young consultant, the company created both a new product and a new paradigm for the industry—the energy derivative.” When Skilling’s plans were very profitable, he was promoted to COO of the trading division. With this success, he hired Andrew Fastow; who became CFO Chief