The Enron Scandal Essay

945 words - 4 pages

Founded in the early 1980's when Houston Natural Gas merged with Omaha, Enron rapidly became one of the biggest energy company in the United-States. By 2001, the energy giant was number 7 in the Fortune 500. In less than 15 years, it became a multi-billion dollar corporation and expanded internationally. And was starting to have big influences on the population and the world.While everybody was investing and buying stocks from the company, thinking it was a very good one. Enron wasn't being loyal and was cheating her way up. The firm's success turned out to have involved an elaborate scam. Enron lied about its profits and stands accused of a range of shady dealings, including concealing debts so they didn't show up in the company's accounts. In a matter of months, one the biggest companies in the United States went from high to floor. It completely collapsed.It all begun when Kenneth Lay, an energy economist, became chairman and chief executive of Enron. His ambition for the company helped it go beyond the piping business and go international. He wanted to see an energy trading revolution and place Enron at the heart of it. By 2001, he appeared to be succeeding, having created a multi-national corporation and created thousands of jobs with annual income of billions of dollar.In 1980's at the birth of Enron, energy corporations lobbied Washington to deregulate the business. They were fed up of the big shots in control of all the energy monopole. Companies including Enron said the extra competition would benefit both companies and consumers. New suppliers came to the market and competition increased. But the price of energy became more volatile in the free market.Enron saw its chance to make money out of these fluctuations. It decided to act as middle man and guarantee stable prices. And it offered that by buying and selling tomorrow's gas at a fixed price today. The new Enron was emerging.Enron decides to go online and create the ERONONLINE which will allow Enron's future shareholders and shareholders to view real-time prices and transact instantly online. It was one of the first amongst energy companies to begin trading through the internet, offering a free service that attracted a vast amount of custom.At about this time, it is believed that Enron began to use sophisticated accounting techniques to keep it's share price high, raise investment against it's own assets and stock and maintain the impression of a highly successful company. Enron could also legally remove losses from its books if it passed these "assets" to an independent partnership. Equally, investment money flowing into Enron from new partnerships ended up on the books as profits.By the summer, Enron's shares had hit an all time high of more than $90. Enron's 2000 annual report reported global revenues of $100bn. Income had risen by 40%...

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