Enron: from the Beginning to the End

Enron took on the role of a ‘gas bank’ and started operations in 1989, where, it bought gas from suppliers and sold it to consumers, profiting from a fee charged for carrying out the transaction. The company flourished under the business model which impressed Lay, who then created a new division called Enron Finance Corp in 1990 and assigned Skilling to take charge of operations. Enron Finance Corp. soon dominated the market with more contacts and contracts with regard to suppliers and consumers compared to any of its competitors.

The company Enron was formed in 1985 after two natural gas companies, Houston Natural Gas and InterNorth merged together. Kenneth Lay, former chief executive officer of Houston Natural Gas was named CEO of Enron and a year later, Lay was assigned to the chairman of Enron. A few years later, Enron launched a website to allow customers to buy stock for Enron, making it the largest business site in the world. The growth of Enron was rapid; it was even named seventh largest company on the Fortune 500 list; however things began to fall apart in 2001. (News, 2006). In the third quarter of that same year, Enron posted an enormous loss of over $600 million in four years. This is one of the reasons why one of the top executive resigned even though he had only after six months on the job. The stock prices of Enron fell dramatically.

Enron 's origins date back to 1985 when it began life as an interstate pipeline company through the merger of Houston Natural Gas and Omaha-based Inter North. Kenneth Lay, the former chief executive officer of Houston Natural Gas, became CEO, and the next year won the post of chairman.

3. SAS 45 Related parties - Special Purpose entities were a mechanism to raise needed financing for various purposes without being required to report the debt in their balance sheets. Enron used gaping loophole in accounting practice to create hundreds of SPEs and it did not limit its SPEs to financing activities. Enron used SPEs for the purpose of downloading underperforming assets from its financial statements to the financial statements of related by unconsolidated entities. SPE would finance the purchase of those assets by loans collateralized by Enron’s common stock. In some cased, undisclosed side agreement made by Enron with an SPE’s nominal owner insulated those individuals from any losses on their investments and, in fact, guaranteed them a windfall profit. Even more troubling, Enron often sold assets at grossly inflated prices to their SPEs allowing the company to manufacture large “paper” gain on those transactions.

The company Enron was formed in 1985 after two natural gas companies, Houston Natural Gas and InterNorth merged together. Kenneth Lay, former chief executive officer of Houston Natural Gas was named CEO of Enron and a year later, Lay was assigned to the chairman of Enron. A few years later, Enron launched a website to allow customers to buy stock for Enron, making it the largest business site in the world. The growth of Enron was rapid; it was even named seventh largest company on the Fortune 500 list; however things began to fall apart in 2001. (News, 2006). In the third quarter of that same year, Enron posted an enormous loss of over $600 million in four years. This is one of the reasons why one of the top executive resigned even though he had only after six months on the job. Their stock prices fell dramatically. Eventually, Enron filed for bankruptcy protection. This caused many investors to lose money they had invested in the company and employees to lose their jobs and their investments, including their retirement funds. The filing of bankruptcy and the resignation of one of the top executives, also led to an investigation by the U.S. Securities and Exchange Committee, which proved to be one of the biggest scandals in U.S. history. (News, 2006). All former senior executives stood trial for their illegal practices.

Two years after Enron filed for bankruptcy in 2001, Nancy b. Rapoport wrote this essay expressing her unique perspective on the real cause of Enron’s demise. This essay catches the reader’s attention instantly, because unlike abundant other articles written on the biggest corporate scandal in American history, the author here rejects Jeff Skilling’s (former president of Enron) argument1 of what brought about Enron’s downfall. She instead uses another metaphor, arguing that Enron’s downfall was more like Titanic’s-

Second, they duped their employees. Thousands of employees invested their savings and pensions in the company’s share market, while executives of Enron were actually selling their shares because they saw the deteriorating performance of Enron. Between 1999 and mid 2000, when Enron shares were increasing on the stock market in New York, 29 members of the company’s management received a total amount of 1.1billion US dollars by selling a total of 77.3 million shares (The Ninth International Conference “Investments and Economic Recovery”, May 22 – 23, 2009).

Ethics in the business world can often times become a second priority behind the gaining of profits and success as a company. This is the controversial issue that led to the Enron scandal and ultimately the fall of this company. Enron Corporation was an energy company, and in the peaks of their success, they were the top supplier of natural gas and electricity throughout America. Enron Corporation came about from a merger between Houston Natural Gas and InterNorth. Houston Natural Gas was a gas providing company formed in Houston during the 1920’s. InterNorth was a company formed in Nebraska during the 1930’s and owned one of America’s largest pipeline networks. In 1985, Sam Segnar, the CEO of InterNorth bought out Houston Natural Gas for $2.4 billion. A year later in 1986, Segnar retired and was replaced by Kenneth Lay, who renamed the company and created Enron. Enron was the owner of the second largest pipeline in America that measured over 36,000 miles. The company was also the creator of the “Gas Bank”, which was a new way to trade and market natural gas and served as an intermediary between buyers and sellers. As the company continued to develop, it became more of a trader rather than a producer of gas. This trading extended into coal, steel, water and many other areas. One of Enron’s largest successes was their creation of a website called, “Enron Online” in 1999, which quickly became one of the top trading cites in the world. By the year 2000 Enron as a company was

The story of Enron begins in 1985, with the merger of two pipeline companies, orchestrated by a man named Kenneth L. Lay (1). In its 15 years of existence, Enron expanded its operations to provide products and services in the areas of electricity, natural gas as well as communications (9). Through its diversification, Enron would become known as a corporate America darling (9) and Fortune Magazine’s most innovative company for 5 years in a row (10). They reported extraordinary profits in a short amount of time. For example, in 1998 Enron shares were valued at a little over $20, while in mid-2000, those same shares were valued at just over $90 (10), the all-time high during the company’s existence (9).

     In May 2001, the energy market took a tumble as Californians struggled with the soaring prices of energy. California politicians blamed Enron for manipulating the energy market. In 2001, Californians were hit with skyrocketing energy prices, rolling blackouts, and one of the leading utility companies, Pacific Gas and Electric Company, filing for bankruptcy. Enron was hit with a change of CEO’s; Lay resigned as CEO and Skilling replaced him (for only a short time). In October 2001, the energy crisis took a turn for the worst and marked the beginning of the end of Enron. On October 12, 2001, Enron disclosed a $638 million loss in its third quarter for the fiscal year. This monetary disclosure sparked an interest by the US Securities and Exchange Commission (SEC), who began to inquire about Enron’s financial statements. Shortly after, Enron fired Andrew Fastow, the organization’s CFO, due to what Enron calls losing investor confidence (Swartz). The termination of Fastow increased

The Enron corporation was formed in 1985 by the merging of two natural gas companies, Houston Natural Gas, and InterNorth; In the following year Kenneth Lay was appointed Chairman and CEO.2 Enron began its escapade of fraud and corruption in April of 1987 when it was discovered by Enron executives that Louis Borget and Thomas Mastroeni, traders in their Valhalla, New York office, known as Enron Oil, had been misappropriating funds; traders were “gambling beyond their limits, destroying trading reports, keeping two sets of books and manipulating accounting” (PBS, 2015) to make it appear as if the company’s profits were legitimate. The shocking yet not surprising response from CEO Kenneth Lay was not to fire the two

After a merger in 1985, between two relatively small regional companies Houston Natural Gas Co., and InterNorth Incorporated, Enron Corp was formed. Enron Corporation became one of the biggest energy, and service company across the united states. Following this merger, Kenneth lay, who was at the time the CEO of Houston Natural Gas, also became the CEO of the newly formed Enron Corp. With his savvy skills already adopted in the smaller regional natural gas company, Kenneth Lay, was ready to label Enron into the energy trader and supplier powerhouse. This dream of turning Enron into natural gas resource was

The reprehensible story of the Enron Corporation’s rapid rise to success followed by their consequential disgraceful fall is one that has captivated the attention of the public for more than a decade. Not only was this scandal highlighted largely due to the widespread publication of the Enron Corp’s actions in the newspapers and television but must notably their substantial contradictory actions against not only basic ethics but Enron’s published Code of Ethics. Outlining the reputation of Enron, Kenneth Lay, Chairman and Chief Executive Officer (CEO), in a foreword within Enron’s Code of Ethics stated, “to be proud of Enron and know that it enjoys a reputation for fairness and honesty and that it is respected.” Even though Kenneth Lay spoke to the company as a whole on manners in ethics and good conduct, it was he and a number of other high placed executives who choose to ignore their own statements and act in complete disregard. When running an organization executives are held responsible and expected to maximize their shareholders interests and enhance overall capital gain while upholding to the practice of ethical processes and abiding by common governing virtues. Through the study of three key virtues (integrity, fairness, and justice) and applying them to the Enron case, it will quickly be seen how evident the leaders of this organization choose to neglect ethical practices and virtues to gain personal financial growth.

The year was 1960, the man was Arthur J Rosenberg, and Tyco Company was the new investment company. Tyco began as a medical investment company and is solely responsible for developing the first laser beam used in medical procedures. By 1964 Tyco walked into the commercial aspect of investment. The company was booming and John Gaziano, became known as one of the top corporate managers in the world. . At this point in 1982 Tyco hugely expanded and was now involved in 3 areas of investment: Fire Protection, Electronics, and Packaging with an estimated value of $500 million. The 1990’s brought more success for Rosenberg and Tyco. Now being a global company, the name was changed to Tyco International and at this point was involved in over 30

Enron was founded in 1985 and was an American energy company that dealt with trading commodities, and services which was headquartered in Houston, Texas. Enron distributed natural gas all over the United States, they were also involved in transmitting, generating, and distributing electricity. They also traded commodities at a global level. The company grew to become the seventh largest publically traded company in the nation.