As a result of this declaration of deregulation, ENRON executives were permitted to maintain agency over the earnings reports that were released to investors and employees alike. Misrepresentation By misrepresenting earnings reports while continuing to enjoy the revenue provided by the investors not privy to the true financial condition of ENRON, the executives of ENRON embezzled funds funneling in from investments while reporting fraudulent earnings to those investors; this not only proliferated more investments from current stockholders, but also attracted new investors desiring the enjoy the apparent financial gains enjoyed by the ENRON corporation. Due to the fact the ENRON was a then-widely respected corporation, the general populace were not wary about the validity of these statements.
In less than a year, Enron had gone from being considered one of the most innovative companies of the late 20th century to being deemed a byword for corruption and mismanagement.
In its first few years, the new company was simply a natural gas provider, but by it had begun trading natural gas commodities, and in it began trading electricity. The company introduced a number of revolutionary changes to energy trading, abetted by the changing nature of the energy markets, which were being deregulated in the s and thus opening the door for new power traders and suppliers.
Enron tailored electricity and natural gas contracts to reflect the cost of delivery to a specific destination—creating in essence, for the first time, a nationwide and ultimately global energy-trading network.
By the late s, Enron had begun shuffling much of its debt obligations into offshore partnerships—many created by Chief Financial Officer Andrew Fastow. At the same time, the company was reporting inaccurate trading revenues. Some of the schemes traders used included serving as a middleman on a contract trade, linking up a buyer and a seller for a future contract, and then booking the entire sale as Enron revenue.
Enron was also using its partnerships to sell contracts back and forth to itself and booking revenue each time. By this point Lay had received an anonymous memo from Sherron Watkins, an Enron vice president who had become worried about the Fastow partnerships and who warned of possible accounting scandals.
By October 22 the Securities and Exchange Commission had begun an inquiry into Enron and the partnerships; a week later the inquiry had become a full investigation.
On December 2 Enron, which a year before had been touted as the seventh largest company in the U. A month later Lay resigned, and the White House announced that the Department of Justice had begun a criminal investigation of Enron.
By mid the once-mighty company was in tatters.
Throughout the spring top Enron officials were subpoenaed to testify before congressional hearings. In June Arthur Anderson was convicted in federal court of obstruction of justice, while many other American companies scrambled to reexamine or explain their own accounting practices.May 14, · Enron’s heyday has long ended.
But its lessons will long endure. The global business community is now watching a painful new chapter is this saga -- one where its former high-riding chief. In addition to Andrew Fastow, a major player in the Enron scandal was Enron's accounting firm Arthur Andersen LLP and partner David B.
Duncan, who oversaw Enron's accounts. In , the company launched its broadband services unit and Enron Online, the company's website for trading commodities, which soon became the largest business site in the world.
Keywords: Enron scandal, Accounting fraud, Moral responsibility, Analysis 1. Review of Enron’s Rise and Fall Throughout the late s, Enron was almost universally considered one of the country's most innovative companies -- a new-economy maverick that forsook musty, old industries with.
An Ethical Analysis of the Enron Scandal Essay Sample. The Enron scandal is one that left a deep and ugly scar on the face of modern business. As a result of the scandal, thousands of people lost their jobs, some people lost their entire pensions, and all of the shareholders lost the money that they had invested in the corporation after it went bankrupt.
Analysis of Enron Scandal.
EXECUTIVE SUMMARY The report analyzes how the Enron Scandal took place and how the big energy giant was collapsed suddenly and eventually filed for bankruptcy/5(1).