Essay on THE FALL OF ENRON - 727 Words

The Fall of Enron The History Enron began as a pipeline company in Houston in 1985. It profited by promising to deliver so many cubic feet to a particular utility or business on a particular day at a market price. That change with the deregulation of electrical power markets, a change due in part to lobbying from senior Enron officials. Under the direction of former Chairman Kenneth L. Lay, Enron expanded into an energy broker, trading electricity and other commodities. The Business of Enron Enron became a giant middleman that worked like a hybrid of traditional exchanges. But instead of simply bringing buyers and sellers together, Enron entered the contract with the seller and signed a contract with the buyer, making money on the†¦show more content†¦According to an email sent February 6, 2001, Andersen considered dropping Enron as a client. In August, Enron Vice President Sherron Watkins wrote an anonymous memo to former Chairman Kenneth Lay, detailing reasons she thought Enron â€Å"might implode in a wave of accounting scandals.† On October 16, Enron announced a $638 million loss for the third quarter, and Wall Street reduced the value of stockholders’ equity by $1.2 billion. Enron announced November 8, that it had overstated earnings over the past four years by $586 million and that it was responsible for up to $3 billion in obligations to various partnerships. A $23 billion merger from rival Dynegy was dropped November 28 after lenders downgraded Enron’s debt to junk bond status. Who’s to Blame? Kenneth Lay, (former Enron Chairman and CEO) and Enron poured millions of dollars into both political parties, cultivating access and using the entrà ©e to lobby Congress, the White House and regulatory agencies for action that critical to the energy company’s spectacular growth. Greg Whalley, (former Enron President and Chief Operation Officer) had six to eight conversations last fall with the Treasury’s Department Peter Fisher, including one in which he asked Fisher to call Enron’s lenders as they decided whether to extend credit to the company. Andrew Fastow, (former Enron Chief Financial Officer) wasShow MoreRelatedThe Fall of Enron1146 Words   |  5 PagesCase: The Fall of Enron 1. Why was Enron such an admired company prior to 2000? What innovation do they bring to the table? Be specific and support your statement with concrete information. Enron was an admired company prior to 2000 because at that time it surfaced as a frontrunner in the deregulated energy market, making it possible to sell energy at higher prices, thus significantly increasing its revenue. The company, through efficient management team, has built leading businesses in energyRead MoreFall of Enron1160 Words   |  5 PagesThe Fall of Enron 1. Why was Enron such an admired company prior to 2000? What innovation do they bring to the table? Be specific and support your statement with concrete information. Prior to the year 2000, Enron Company, established in the mid-80s, caused the admiration worldwide because of its fast rise of revenue both in the local and international stock market in a short period of time. Enron’s operating income in the year 2000 was stated in $100.7 billion and its after-tax net income wasRead MoreThe Rise and Fall of Enron1170 Words   |  5 PagesThe Enron Corporation was founded in 1985 by Kenneth Lay and based in Houston, Texas. Enron was known as one of the world’s leading electricity, natural gas, communications and pulp and paper companies. By the late 1990s Enron was considered one of the country’s most groundbreaking companies constructing power plants, gas lines, buying and selling electricity and gas, and partaking in a unique trading business; creating whole new markets for oddball commodities. In 1995 annual revenues were aroundRead MoreThe Rise And Fall Of Enron1008 Words   |  5 PagesIntroduction 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 â€Å"The Beginning Presages the End†, C. William Thomas (2002) writes: â€Å"Thanks to the young consultant, the company createdRead MoreThe Rise and Fall of Enron1532 Words   |  6 PagesMost of the world has heard of Enron, the American, mega-energy company that â€Å"cooked their books† ( ) and cost their investors billions of dollars in lost earnings and retirement funds. While much of the controversy surrounding the Enron scandal focused on the losses of investors, unethical practices of executives and questionable accounting tactics, there were many others within close proximity to th e turmoil. It begs the question- who was really at fault and what has been done to prevent it fromRead MoreThe Rise And Fall Of Enron1900 Words   |  8 PagesThe Rise and Fall of Enron One of the most basic tenets of all companies, whether small or large, is to create a principled corporate culture. Those ethical principles must start with the executives of the organization and trickle down to the individual employees. Leaders affect the employees’ decision-making process, yet they tend to adopt the same rationale as their leaders when reaching a decision. The leadership of a company needs to find a balance between risk and creating opportunity. WhileRead MoreThe Rise and Fall of Enron2970 Words   |  12 PagesThe Leadership of Kenneth Lay 5 Contributing Factors for Enron’s Debacle 7 Power Abuse 7 Fraudulent Accounting Practices 7 Employees and Board members 8 Investors Grief 9 Auditors and external regulatory agency 9 Conclusion 9 The debacle of Enron, led not only the company to bankruptcy but also its employees and shareholders. Unethical leadership and vested interests played a significant role in its imminent failure. Very few had the courage to challenge authority and leave when faced withRead MoreThe Rise And Fall Of Enron Essay860 Words   |  4 PagesThe Rise and Fall of Enron The objective of every company is to maximize profit, become a big player and remain viable. Enron was no exception the key players at the time were Kenneth Lay CEO, Jeffery Skilling who was hired by Lay in 1990 to head the Enron Finance Corporation and by 1997 Skilling was made President and Chief Operating Officer. Andrew Fastow, CFO who was the chief financial officer of Enron. Enron merged Houston Natural Gas in 1985 with another natural gas pipelineRead MoreFall of Enron Essay1430 Words   |  6 PagesQ1- Who were the key stakeholders involved in, or affected by the collapse of Enron? How and to what degree were they hurt or helped by the actions of Enron management? Ans- The key stakeholders affected by the collapse of Enron were its employees and retirees. Stakeholders and mutual funds investors lost $ 70billion market value. Banks were also affected by the meltdown of the company. They included big banks like J P Morgan Chase and Citigroup. Not only the stakeholder and bondholder lose outRead MoreRise and Fall of Enron Essay872 Words   |  4 PagesThe rise and fall of Enron is a company that was lead to its own demise by it’s own leadership and ill business decisions. The motivational theories explained from the readings of Organization Behavior can correlate with the failure of Enron’s internal organization. Even though a company may appear to display successful business practices, the influence of leadership through management can ultimately lead the company to fail. Enron’s code of ethics prided itself on four key values; respect, integrity