The Culture And Dynamics Of Conflict

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’s senior management placed their loyalty to solely themselves above everyone else with an interest to the company, for example foreign governments, employees, contractors, customers. When Enron was in financial crisis, employees were prohibited from selling the shares whilst the senior members most notably Mr. Lay was selling his shares, The sense of betrayal was greatly increased due to the loss of their retirement savings and loss of their jobs

Enron, the natural gas provider turned trader of natural gas commodities and in 1994, electric, was once touted as the seventh largest company in America. Kenneth Lay, founder, began changing Enron from just a provider into a financial energy powerhouse. Lay took advantage of the dot-com boom of the late 1990’s by creating Enron Online, an internet trading platform. Internet stocks were valued at astronomical prices and were all the rage on wall street, who accepted the increasing prices as normal (Investopedia). On December 2, 2001 Enron declared chapter 11 bankruptcy, resulting in the loss of twenty thousand jobs and billions of investor and creditor dollars. Enron, once designated as "America 's Most Innovative Company" by Fortune for six years consecutively, enacted massive financial fraud at the fault of its top level executives: Kenneth Lay, Jeffery Skilling, and Andrew Fastow.

On December of 2001, the nation’s seventh largest corporation valued at almost $70 billion dollars filed for bankruptcy. Illegal and fraudulent accounting procedures would led to the demise of the company. Over 20,000 people lost their jobs, and about $2 billion in pensions and retirement funds disappeared. Despite all this, Kenneth Lay, Jeffrey Skilling and Anthony Fastow profited greatly from Enron. These events resulted in the implementation of new legislation on the accuracy of financial reporting for public companies. The fall of Enron became known as the largest corporate bankruptcy in the United States at the time.

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

WorldCom, for example, was facing a downward trend in their industry. The telecommunications company was going south, especially thanks to text messaging and the internet. In addition, the government denied them the ability to merge with Sprint (a $129 billion dollar merger), which quickly halted their growth. WorldCom had built a growth strategy built upon mergers and acquisitions, instead of growing product lines and larger marketing campaigns. So when the federal government denied their ability to grow large enough to discourage competition, they had to look elsewhere to increase shareholder profitability. Another venue of motivation was of course based upon the Fraud Triangle. This diagram or model consists of three things for one to commit fraud: pressure, opportunity, and rationalization. WorldCom had all three things – leading them straight towards disaster. The CFO was facing immense pressure from stakeholders and the executive board to increase profits (and growth), he had the opportunity as he controlled the books, and he either had justification or, more probably, a lack of ethics. Applying this triangle to Enron, all three factors were present. Enron was facing immense pressure to continue their standing as one of the top 10 fortune 500 companies, as well as continuing to be named one of the world’s most

Enron was at one time America 's seventh largest corporation. Enron fooled the world by portraying to be a steady company with good revenue but at the end we all seen that was not the case. Surprisingly large parts of Enron profit were made of paper. This was made possible due to traders and executives who were corrupt. Having deep debt and hiding

Nice job on your post, but I do have a question which is: since law was created in conflict and natural order, who is to say that the law is right? Can the law be bended to fit whomsoever purposes mainly the wealthy verse the poor? To this learner I think this is where the birth of Conflict theory was born, because we all have different ideas of what is right or wrong, which can change based on the power that be, why is that?

Enron was founded by Ken Lay in 1985 as a result of a merger of two gas companies. Enron was in top fortune 500 at number 7 and could not produce accurate financial statements to their investors. Top executives sold over a billion dollars in personal stock two years prior to their demise. Thousands of employees lost their jobs and. Author Anderson shredded all the financial statements all in one day. Employees of Enron lost over a billion and retirement and pension. Many of the top executives got off with just a slap on the wrist. The Sarbanes-Oxley Act of 2002 was set into place to make sure financial organizations are honest with investors.

Enron Corporation was one of the largest energy trading, natural gas and Utilities Company in the world that was based in Huston, Texas. The downfall of Enron is one of the most infamous and shocking events in the financial world, and its reverberations were felt around the globe. Prior to its collapse in 2001, Enron was one of the leading companies in the U.S and considered among top 10 admired corporations and most desired places to work at. Its revenues made up US $139 to $184 billion, assets equaled $62 to $82 billion, and the number of employees reached more than 30,000 people in 20 countries around the world.

By August 2001, the financial statement fraud became obvious and by October Enron management announced that the company was worth $1.2 billion less than what was previously recorded. The difference was due to inflated estimates of income and failure to include all the debt in the financial reports that were sent out to investors. The Securities and Exchange Commission (SEC) started investigating Enron. By November 2001 Enron admitted to overstating its past four year earnings by $586 million and admitted to owing over $6 billion in debt. After this admission the price of Enron stock dropped incredibly. Investors and creditors requested immediate repayments from Enron. However, since Enron could not come up with any cash to repay its creditors, it filed for bankruptcy in December of 2001. Thousands of Enron employees and investors lost their savings, their children’s college funds and pension when Enron collapsed due to financial statement misrepresentation by its management. A lawsuit on behalf of a group of Enron’s shareholders was filed against Enron’s executives and directors whereby 29 of them were accused of insider trading and misleading the public.

Enron began by merger of two Houston pipeline companies in 1985, although as a new company Enron faced a lot of financial difficulties in the starting years, though the company was able to survive these financial problems (Enron Ethics, 2010). In 1988 the deregulation of the electrical power markets came into action and flipped the company from up to down, after deregulation company business updated from delivering energy to becoming an energy broker and soon after this Enron once a company struggling

Enron executives and accountants cooked the books and lied about the financial state of the company. They manipulated the earnings and booked revenue that never came in. This was encouraged by Ken Lay as long as the company was making money. Once word got out that they were disclosing this information, their stock plummeted from $90 to $0.26 causing the corporation to file for bankruptcy.

After reaching the pick of its business Enron started to have some difficulties at the late 1990’s and the greatest scandal started on their stockholders by hiding the results of the losses. And the scandal came to public after a failed merger with Dynegy Inc. in 2001.

The story of Enron begins in 1985, with the merger of two pipeline companies, orchestrated by a man named Kenneth L. Lay (1). In its 15 years of existence, Enron expanded its operations to provide products and services in the areas of electricity, natural gas as well as communications (9). Through its diversification, Enron would become known as a corporate America darling (9) and Fortune Magazine’s most innovative company for 5 years in a row (10). They reported extraordinary profits in a short amount of time. For example, in 1998 Enron shares were valued at a little over $20, while in mid-2000, those same shares were valued at just over $90 (10), the all-time high during the company’s existence (9).