What was the name of the ENRON executive who was hired by Jeff Skilling and served as the Chief Financial Officer…
What is a trebuchet? How can a trebuchet use gravity? What does gravity have to do with launching an object? To begin, a trebuchet is a…
Some investors that are misled lost chunk if not all of their investments. The public, investors, employees, pension holders and politicians were so outraged and wanted to why Enron's failings were not spotted earlier. Enron did not do these all alone, they have accomplice in the name of another giant accounting/auditing company called Arthur Andersen where they helped the firm overlooked significant debts that are not the Enron’s financial statement. They knew that Enron was over its head but they let the company conceal its debt over a long period of that which eventually led to the downfall of the company. The highlight of this section is that Enron’s top managements self interest, greed led to presenting the investors and board of directors misleading financial statements. Because of their greed and self interest, a crime was committed that led to prosecution of some of the Enron’s top managers. For example, Former Enron executive Michael Kopper pleads guilty to conspiracy to commit wire fraud and money laundering conspiracy. While Andrew Fastow Former CFO was charged with securities fraud, wire fraud, mail fraud, money laundering and conspiracy. To avoid another Enron, the US Congress passed a law called Sarbanes-Oxley Act 2002…
Vincent Van Gogh, a famous painter from the renaissance, once said, “What would life be if [people] had no courage to attempt to anything?” The poem, Washington Crossing the Delaware by David Shulman, and the painting, Washington Crossing the Delaware by Emanuel Leutze, both exemplify courage in the face of adversity. The theme courage is shown through structure, mood, and technique.…
What happened to Enron was just its founder at the time Ken Lay was greedy and unethical right from the beginning, and that was how he steered the boat to that direction. Instead of firing traders who were pocketing profits for themselves, manipulating reports which showed steady financial trends, he managed to keep them, because they were making a lot of money for the company. So he was giving opportunities for this staffs to do underhand works and he only cared if it made profits for the company. Later, when Jeff Skilling joined Enron, he developed what Lay had…
Greed, power and personal satisfaction are all characteristics that motivate people to do things that might not always be in the best interest of others. In the case of Lay and Skilling, along with dozens of other executives, this is exactly what happened. There was no acceptance of blame, only ignorance and death. Enron was a highly respected company in many ways. As one of the fastest growing, wealthiest companies in the 90’s, Kenneth Lay’s praises were sung by presidential candidates, the Fortune 500 and widely renowned business magazines across the country CITATION Joh123 \l 1033 (Johnson, 2012). How could a company who had such highly profiled respect and revenue be at the root of such a huge scandal?…
This kind of contempt of enterprise culture is the consequence that Enron changed their "focus strategy" and transferred into financial investment and so-called innovative business. In 1997, Enron's business expanded to natural gas derivative financial products transactions. In 2000, the "commodity exchange" accounted for nearly 90% of Enron’s sales. These contracts include interest rate swaps, derivatives and other complex financial products. However, this so-called "innovation" lies in the fact that the traditional accounting system is very difficult to confirm these new contract revenues. This is the "Enron trap". There is no doubt that Jeff Skilling had reversed the corporate values of Enron, especially in 1997, Andy Fausto was appointed as the CEO of Enron, started a new round of "unconventional" expansion under a limited market demand situation. At this time, Enron has already changed from a large energy company to a company engaged in energy derivatives transactions.…
Jeffrey Skilling said in his testimony before Congress, “Everything he did was in the interests of Enron’s stockholders.” To me, this statement could not be farther from the truth. While it is true that Enron’s stock was skyrocketing at the…
In 1975 Jeffrey Skilling received his B.S. from Southern Methodist University in applied science, and in 1979 received his M.B.A. from Harvard. He was hired by McKinsey & Company as a consultant and in 1987 began working with Enron to help create a forward market in natural gas (wikipedia.org). Ken Lay hired Skilling in 1990 as chairman and chief executive officer of Enron Finance Corp. and in 1991 he became the Chairman of Enron Gas Services Co. Also, he was appointed CEO/managing director of Enron Capital & Trade Resources. Skilling was promoted to second highest position in the company, president and chief operating officer in 1979. By pushing an aggressive investment strategy, Skilling helped Enron to become the biggest wholesaler of gas and electricity (biography.com). On February 12, 2001 he was named the new CEO of Enron, replacing Ken Lay. Later in 2001, during the energy crisis in California; Skilling resigned on August 14 and shortly after he sold off large blocks of his shares of Enron. Enron declared bankruptcy in December 2001. The Federal Bureau of Investigations indicted Skilling on 35 charges, which he pleaded not guilty on February 19, 2004(wikipedia.org). His trial began on January 30, 2006 and lasted four months. On May 25, 2006 he was found guilty on one count of conspiracy, one count of insider trading, five counts of making false statements to auditors, and twelve counts of securities fraud; and not guilty on nine counts of insider trading(wikipedia.org). October 23, 2006 Skilling was sentenced to 24 years and 4 months in a federal prison and was fined 45 million dollars. Skilling began serving his prison term on December 13, 2006 at a low security federal prison in Littleton, Colorado. His release date is scheduled for February 21, 2028 according to the Federal Bureau of…
It has been widely publicized that when CEO Jeff Skilling joined Enron in 1990 he immediately pushed the pipeline company into becoming an energy bank. This change in process allowed Enron to become the middle man for the gas market that at that time had become unreliable due to de-regulation. This action resulted in an accelerated growth of the company. Skilling also persuaded the Securities Exchange Commission (SEC) and Arthur Andersen, an accounting firm to approve the use of mark-to market accounting (M2M) which is a technique where future profit streams normally spread over the life of a specific contract can be taken up front when the contract is signed. Stewart (2006) stated that “Enron used this authorization to record in a single year all of the profit that would normally be recorded over a 10 to 20 year period” (p. 116). This method of accounting made the company appear to be more profitable; however, the profit based on future earnings that may or may not exist for years. Since the company appeared to be financially stable no one questioned the…
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…
Arthur Anderson, Enron 's accounting firm, turned their heads while Enron 's management created "special purpose entities" that kept hundreds of millions of dollars of losses and debt off the balance sheet, which misled individual 's investment decisions. The lack of information led to an overstatement of profits of almost six hundred million dollars and an understatement of debt of six hundred and thirty million dollars between 1997 and 2000. Arthur Anderson was not the only one releasing misleading information, some of Enron 's senior managers also misled investors into thinking the company was in better shape than it was. During this time Kenneth Lay was cashing in his own Enron stock, which sold for thirty seven million dollars (Thomas, 3).…
The Chairman of the board, Kenneth Lay, and CEO, Jeffrey Skilling hired the CFO, Andrew Fastow, and allow him to develop a staff of executives that, through the use of accounting loopholes, special purpose entities, and poor financial reporting, were able to hide billions in debt from failed deals and projects. Chief Financial Officer Andrew Fastow and other executives not only misled Enron 's board of directors and audit committee on high-risk accounting practices, but also pressured Arthur Andersen to ignore the issues.…
In the article entitled Enron Ten Years Later: Lessons to Remember, the authors Anthony H. Catanach Jr. and J. Edward Ketz discuss the importance of learning from the mistakes made by the senior executives of Enron. The “off-balance sheet” that Andrew Fastow, the CFO of Enron, created to funnel tens of millions of dollars into executives and investors pockets and also hide corporate losses contributed immensely to the demise of the corporation in 2001, which had once been valued at $60 billion. Fastow states in a recent article that "the net effect of all these deals was to create a misrepresentation of the company."…
It is common knowledge that Enron is arguably to biggest corporate collapse in recent history. It is not common knowledge, however, what exactly happened within Enron that lead to its demise. Kenneth Lay founded Enron in 1985 when he configured the merging of two natural gas companies. Enron continued to grow by acquisition, leading to large amounts of debt. Lay hired Jeffery Skilling in 1989 to head the company’s finance department. Skilling devised a way for Enron to be the middle man for many commodity markets, when added together Enron traded over 1,800 unique products.…