Enrons Fall
Enrons Fall
Kenneth Lay – CEO
Auditors – Arthur Anderson
Jeffrey Skilling – Consultant, Hired as a young consultant, as due to deregulation, Enron incurred massive debts. Jeffrey skilling was hired to come up with innovative new ideas. His revolutionary idea for Enron was to ‘create a gas bank in which Enron would buy gas from a network of suppliers and sell to a network of consumers, contractually guaranteeing both the supply and the price, charging fees for the transactions and assuming the associated risks’
Lay impressed with Skillings brilliance, created a separate division for him to run, Enron Finance Corp.
Due to their market dominance, Enron could predict the future prices with great accuracy and where therefore able to generate superior profits.
Skiling in 1996 became the chief operating officer, and sold the idea that the ‘gas bank’ concept could be incorporated into the electric industry. Soon after Enron acquired Portland General Electric Corp.
With profits skyrocketing, ‘they were ready to create a market for anything that anyone was willing to trade: futures contracts in coal, paper, steel water and even weather’
Skilling hired Andrew Fastow in 1990, who became his protégé. Working his way up swiftly, became the financial chief officer in 1998. PRC – Performance Review committee, ranked from 1-5, 1 meaning you got closer to skilling, 5 meaning you usually got fired within 6 months. Everyone then became instantly motivated to work harder to generate more profits As the internet and technology market was growing vastly, In 2000 Enron and blockbuster announced a deal to provide high speed internet just electricity and gas flowed to consumers. They would provide the service of movies on demand to any household. INVESTING hundreds of millions of pounds with very little return the deal became insignificant Mark to Market accounting – “Whenever companies have an outstanding energy-related or other derivative contracts
Kenneth Lay – CEO
Auditors – Arthur Anderson
Jeffrey Skilling – Consultant, Hired as a young consultant, as due to deregulation, Enron incurred massive debts. Jeffrey skilling was hired to come up with innovative new ideas. His revolutionary idea for Enron was to ‘create a gas bank in which Enron would buy gas from a network of suppliers and sell to a network of consumers, contractually guaranteeing both the supply and the price, charging fees for the transactions and assuming the associated risks’
Lay impressed with Skillings brilliance, created a separate division for him to run, Enron Finance Corp.
Due to their market dominance, Enron could predict the future prices with great accuracy and where therefore able to generate superior profits.
Skiling in 1996 became the chief operating officer, and sold the idea that the ‘gas bank’ concept could be incorporated into the electric industry. Soon after Enron acquired Portland General Electric Corp.
With profits skyrocketing, ‘they were ready to create a market for anything that anyone was willing to trade: futures contracts in coal, paper, steel water and even weather’
Skilling hired Andrew Fastow in 1990, who became his protégé. Working his way up swiftly, became the financial chief officer in 1998. PRC – Performance Review committee, ranked from 1-5, 1 meaning you got closer to skilling, 5 meaning you usually got fired within 6 months. Everyone then became instantly motivated to work harder to generate more profits As the internet and technology market was growing vastly, In 2000 Enron and blockbuster announced a deal to provide high speed internet just electricity and gas flowed to consumers. They would provide the service of movies on demand to any household. INVESTING hundreds of millions of pounds with very little return the deal became insignificant Mark to Market accounting – “Whenever companies have an outstanding energy-related or other derivative contracts