The Enron Scandal

Enron was an energy trading and communications company located in Houston, Texas. During 1996-2001 Enron was given the name of America’s Most Innovative Company by Fortune magazine as it was the seventh-largest corporation in the US. The problem that led this company to bankruptcy was due to the fact that fraudulent accounting practices took place allowing Enron to overstate their earnings and tuck away their high debt liabilities in order to have a more appealing balance sheet (Forbes.com, 2002). Enron’s accounting team “cooked” the books to every meaning of the word so that their investors would not see anything wrong with the failing organization. This poorly structured company led people to jail time, unemployment, and caused retirement stocks to be dried up. Enron had a social responsibility to its stockholders and rather than being up front and honest about the failing company they hid every financial flaw in order to keep receiving money from its investors. By Enron not keeping a social

Enron was one of the largest corporations in the United States. Enron was reporting revenues of over $100 billion, and its stock was being sold for $80 a share (Goethals, Sorenson, & Burns, 2004). However, it was using shady and unethical business practices, such as listing inflating its revenue and hiding debts in special purpose entities. Eventually, their faulty accounting caught up with them, and their market share plummeted. This was credited as one of the worst auditing failures.

Enron was an energy, commodities and services company that had employed close to 22,000 people and had revenue of nearly $101 billion in 2000, shortly before its downfall (Fusaro

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

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. The stock prices of Enron fell dramatically.

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

The Enron corporation was an amalgamation of Houston Natural Gas and Internorth two of the largest natural gas suppliers in the United States. It was built upon the company 's ability to convince congress to deregulate the sale of natural gas through supplying electrical pieces at market prices. This allowed Enron to begin to sell power at higher prices therefore driving their revenue up. The company also began to spread its grasp out of natural gas and into a myriad of other power sources across the globe including water, pulp and paper plants. This was all done through a massive series of loopholes and massive amounts of money being funneled into Congress to lobby against regulations of such activities.

Enron used this loop hole and began to take many assets and liabilities off its balance sheet and into that of SPE’s, so as to be able to access more capital and significantly reduce its risks. It specifically used these SPE’s to borrow funds directly from outside lenders by supplying its own credit and using its high stock prices as guarantees. Enron took full advantage of accounting limitations in managing its earnings and balance sheet to portray a rosy picture of its performance.

Enron started as a sound company that had a promising future in the oil and energy business. The companies CEO and CFO were charged on 35 different accounts of fraud, conspiracy, and insider trading that cleared most of its employee’s retirement pensions and billions of dollars for others (Unknown, 2016). It is impossible to account for every transaction that a company will produce, but the revamping of government

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.

Beginning in 1991, Enron expanded it electricity business by building the first power plant in England, Teesside and become the largest plant built in the world with about 1,875 megawatts. Subsequently, Enron built power plants in industrial and developing nations all over the world: Italy, Turkey, Argentina, China, India, Brazil, Guatemala, Bolivia, Colombia, the Dominican Republic, the Philippines, and much more others in many countries. By 1996, the revenues of the Enron Company were from these worldwide projects and it was about 25 percent before counting the interest and taxes.

Enron lead the American energy, commodities, Enron Services was based in Houston, TX. During the turn of the 21st century Enron had an employee base of 20,000 people on payroll. Enron made profits by selling electricity, natural gas, communications, and pulp and paper. Enron’s revenues totaled over $101 billion in 2000. Due to Enron’s earning Fortune named Enron as the America Most Innovative Company. Enron was one of the biggest publicly traded companies and highly trusted by all investors. Enron earnings flourished during the start-up of the computer dotcom era in the 1990s. In November 1999, Enron build and launched EnronOnline site. This was the first ever web-based transaction system allowing buyers and sellers to buy, sell, and trade commodity products around the world. Enron peaked; $6 billion worth of commodities transacted through their EnronOnline website daily. EnronOnline allowed for Enron stocks to transact with participants in world energy markets. On their financial books Enron looked as they were doing extremely well and many investors sought out to buy Enron’s stocks. Enron net worth was about $70 billion, their shares traded for about $90 dollars each. Enron was known on Wall Street as a blue chip stock and was considered to be very stable and trustworthy. Enron was named the fifth largest company by Fortune 500. Enron lead the market in energy production, distribution, and trading.

Enron lead the American energy, commodities, Enron Services was based in Houston, TX. During the turn of the 21st century Enron had an employee base of 20,000 people on payroll. Enron made profits by selling electricity, natural gas, communications, and pulp and paper. Enron’s revenues totaled over $101 billion in 2000. Due to Enron’s earning Fortune named Enron as the America Most Innovative Company. Enron was one of the biggest publicly traded companies and highly trusted by all investors. Enron earnings flourished during the start-up of the computer dotcom era in the 1990s. In November 1999, Enron build and launched EnronOnline site. This was the first ever web-based transaction system allowing buyers and sellers to buy, sell, and trade commodity products around the world. Enron peaked; $6 billion worth of commodities transacted through their EnronOnline website daily. EnronOnline allowed for Enron stocks to transact with participants in world energy markets. On their financial books Enron looked as they were doing extremely well and many investors sought out to buy Enron’s stocks. Enron net worth was about $70 billion, their shares traded for about $90 dollars each. Enron was known on Wall Street as a blue chip stock and was considered to be very stable and trustworthy. Enron was named the fifth largest company by Fortune 500. Enron lead the market in energy production, distribution, and trading.

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.

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).