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Enron Research Paper

Autor:   •  November 22, 2011  •  Essay  •  2,172 Words (9 Pages)  •  1,939 Views

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Enron Research Paper

In 2001, the world was shocked by the demise of Enron, a multibillion dollar corporation that had thousands of employees and people that had affiliations with the company including The White House itself. Because of the financial chaos and destroyed lives and reputations this catastrophe left in its path, questions arose concerning how exactly it happened, why it occurred, and who was behind it. It is essential to understand how this multibillion dollar corporation rose to power and later imploded. Enron itself was born as the result of Houston's Natural Gas and InterNorth, a gas based pipeline company from Nebraska in 1985. In the final analysis, the conspiracy of Kenneth Lay, Jeffery Skilling, and others, including the accounting firm of Authur Anderson, led to the collapse of Enron due to fraud, shady accounting practices, false reporting revenue, and general disregard of virtually every principle of business ethics.

Kenneth Lay, Jeffrey Skilling and Richard Causey went on trial for their part in the Enron scandal in January 2006. The 53-count, 65-page indictment covers a wide range of financial crimes, including insider trading, making false statements to banks and auditor's bank, fraud, securities fraud, wire fraud, money laundering, and conspiracy. Another huge player in the Enron scandal was Arthur Anderson, who was charged with obstruction of justice for destroying thousands of documents, e-mails, and company files that connected the firm to its audits of Enron. Lay, Skilling, Causey, and their conspirators had engaged in different schemes to trick the investing public, including Enron's shareholders, the SEC, and others, about the true act of Enron's business practices. Enron's publicly reported financial performances and results that were false and misleading because they didn't reasonably and accurately reflect the company's actual financial condition and performance. According to their indictment, the objectives of the conspiracy included "reporting recurring earnings that falsely appeared to grow smoothly by approximately 15 to 20 percent annually and thus create the illusion that Enron met or exceeded the published expectations of security analysts forecasting Enron's reported earnings-per-share and other results; touting falsely the success of Enron's business units; concealing larges losses, ‘write-downs,' and other negative information concerning its business units; masking the true magnitude of debt and other obligations required to keep the company's varied and often unsuccessful business ventures afloat; deceiving credit rating agencies in order to maintain and investment grade credit rating; and artificially inflating the share price of Enron's stock, including attempting to stem and decline of Enron's share price in 2001." In addition to secret oral side-deals, back-dated


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