Enron Scandal Essay

586 WordsApr 16, 20133 Pages
Enron Scandal An Enron scandal summary would sound like another’s high-profit business scandals, except that the Enron executives were actually caught and punished for their misdeeds. Enron was the world’s leading electricity company created by the merger of Houston Natural Gas in 1985. Houston executives Kenneth Lay, Andrew Fastow and Jeffrey Skilling were boasting of record profits with minimal losses. Hide from almost everybody, this image was the result of one of the greatest frauds in financial history. Game is on. Stock prices are based on how successful a company appears not how much money it has in the bank account. Enron’s executives turned this loophole into a gold mine. They posted profits based on how much a given business venture could make, not how much it was actually worth, and covered losses with offshore “shell” companies. Their accountancy firm, Arthur Andersen LLP – was old and well-respected, no one would ever believe it would corporate fraud, making Enron seemed squeaky-clean. The last scams. When Lay and company founded Enron it had a real financial assets, but by late ‘90s, these assets mostly existed as numbers in books. Then, in 2000, one of Enron’s subsidiaries did something that was both stupid and criminal – it created and artificial energy crisis in California. Approximately there were 100 unreal companies with invented non-real names. This increased demand through phony power-plant shutdowns and rolling blackouts. Enron drove up the prices of electricity and its own profits grow up. Also, this focused the attention of journalists and federal investigators on the Enron Company, whose stock price had recently gone impressively up. The collapse. Initially, Skilling and other executives responded to reporters’ questions by insulting them and lying to employees. When pressure was too high, Skilling sold his Enron shares

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