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HISTORY OF ENRON
Kenneth lay is the founder of ENRON
Enron Corporation was an American energy company based in Houston, Texas. ENRON was formed in 1985. ENRON was the most innovative company for six consecutive year. Enron employed around 21,000 people and was one of the world's leading
electricity, natural gas, pulp and paper, and communications companies, with claimed revenues of $111 billion in 2000.
American largest supplier of energy. Deal with many overseas company involving million of dollar.
pipeline
ENRON scandal
ENRON downfall start from 2001.
Its share price fall from $90 to less than $1/share Used poor accounting procedure.
only $13 billion by hiding $25 billion debt . Accounting irregularities.. All of this debt was concealed from shareholders through partnerships with other companies, fraudulent accounting, and illegal loans. Misrepresent the financial statement of the company.. In the year of 2000 Arthur Andersen was paid $52million majority for non audit consulting services.
Arthur Andersen was one of the worlds five leading accounting firms ENRON was 2nd largest client of the Andersen. Andersen hide the looses of the ENRON while making audit. Andersen was paid $52 million mostly for non auditing consulting specially for hiding the looses and show a positive audit report.
Enron only for giving investment grade rating to the company. The company enjoys protection from outside competitors and government securities law.
Jeffrey Skilling Born November 25, 1953 (1953-11-25) Charge(s): conspiracy, securities fraud, falsee statement, insider trading Penalty: ooriginally sentenced to 24 years and 4 months and fined $45 million USD, pending resentencing Status: Incarcerated
Andrew Stuart Fastow Born: December 22, 1961 Charge(s): conspiracy, securities fraud , false statement, insider trading Penalty: 6 years, followed by 2 years of probation Status: Incarcerated
employees, auditors, analysts, bankers, risk rating agencies and investors. Deceptive reporting practices- lack of transparency in reporting financial statement.
bankruptcy. Shareholders lost nearly $11 billion Enron's auditor, Arthur Andersen, was found guilty in a United States District. Employees and shareholders received limited returns in lawsuits, despite losing billions in pensions and stock prices. new regulations and legislation were enacted to expand the accuracy of financial reporting for public companies. legislation,
closing thought
every fraud could have been prevented if honest people had asked right question on the right time