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Encyclopedia > Enron
Enron Creditors Recovery Corporation
Type Defunct / Asset-less Shell
Founded Omaha, Nebraska, 1985
Headquarters Houston, Texas, USA
Key people Kenneth Lay, Founder, former Chairman and CEO
Jeffrey Skilling, former President, CEO and COO
Andrew Fastow, former CFO
Rebecca Mark-Jusbasche, former Vice Chairman, Chairman and CEO of Enron International
Stephen F. Cooper, Interim CEO and CRO
John J. Ray, III, Chairman
Industry formerly Energy
Revenue $111 billion (in 2000)
Employees approx. 22,000 in 2000
approx. 40 as of 2008.
Website http://www.enron.com/

Enron Creditors Recovery Corporation (formerly Enron Corporation) (former NYSE ticker symbol: ENE) was an American energy company based in Houston, Texas. Before its bankruptcy in late 2001, Enron employed around 22,000 people (McLean & Elkind, 2003) 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. Fortune named Enron "America's Most Innovative Company" for six consecutive years. At the end of 2001 it was revealed that its reported financial condition was sustained mostly by institutionalized, systematic, and creatively planned accounting fraud (see: Enron scandal). Enron has since become a popular symbol of willful corporate fraud and corruption. Image File history File links Enron_Logo. ... Omaha redirects here. ... Houston redirects here. ... For other uses, see Texas (disambiguation). ... Motto: (traditional) In God We Trust (official, 1956–present) Anthem: The Star-Spangled Banner Capital Washington, D.C. Largest city New York City Official language(s) None at the federal level; English de facto Government Federal Republic  - President George W. Bush (R)  - Vice President Dick Cheney (R) Independence - Declared - Recognized... Kenneth Lee Ken Lay (April 15, 1942 – July 5, 2006) was an American businessman, best known for his role in the widely-reported corruption scandal that led to the downfall of Enron Corporation. ... Jeffrey Keith Jeff Skilling (born November 25, 1953) was the CEO of Enron Corporation in 2001. ... Andrew Stuart Fastow (born 22 December 1961) was the chief financial officer of Enron Corporation until the U.S. Securities and Exchange Commission opened an investigation into his conduct in 2001. ... Rebecca Mark-Jusbasche was famous as the head of the Enron International division of Enron. ... For the tax agency in Ireland of the same name, see Revenue Commissioners. ... This article is about work. ... A website (alternatively, web site or Web site) is a collection of Web pages, images, videos or other digital assets that is hosted on one or more web servers, usually accessible via the Internet. ... The New York Stock Exchange (NYSE), nicknamed the Big Board, is a New York City-based stock exchange. ... Houston redirects here. ... For other uses, see Texas (disambiguation). ... Notice of closure stuck on the door of a computer store the day after its parent company, Granville Technology Group Ltd, declared bankruptcy (strictly, put into administration—see text) in the United Kingdom. ... Fortune magazine is Americas second longest-running business magazine after Forbes magazine. ... Accounting scandals, or corporate accounting scandals are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations. ... The Enron scandal was a financial scandal that was revealed in late 2001. ...


Enron filed for bankruptcy protection in the Southern District of New York in late 2001 and selected Weil, Gotshal & Manges as their bankruptcy counsel. It emerged from bankruptcy in November of 2004 after one of the biggest and most complex bankruptcy cases in U.S. history. On September 7, 2006, Enron sold Prisma Energy International Inc., its last remaining business, to Ashmore Energy International Ltd. Following the scandal, lawsuits against Enron's directors were notable because the directors settled the suits by paying very significant sums of money personally. The scandal also caused the dissolution of the Arthur Andersen accounting firm, affecting the wider business world.[1] Notice of closure stuck on the door of a computer store the day after its parent company, Granville Technology Group Ltd, declared bankruptcy (strictly, put into administration—see text) in the United Kingdom. ... Weil, Gotshal & Manges LLP is one of the worlds largest and most highly regarded law firms, headquartered in New York City. ... is the 250th day of the year (251st in leap years) in the Gregorian calendar. ... Year 2006 (MMVI) was a common year starting on Sunday of the Gregorian calendar. ... Prisma Energy International Inc. ... For the U.S. Supreme Court case commonly known as Arthur Andersen, see Arthur Andersen LLP v. ...


In early 2007, Enron changed its name to Enron Creditors Recovery Corp. to reflect its status as a (largely) asset-less shell corporation. Its current goal is to liquidate all remaining assets of the company. For most of 2007, Enron continued to operate under the name Enron Corp. by filing a Doing Business As, or "dba" certificate in Harris County, Texas. The phrase doing business as (abbreviated DBA or d/b/a) is a legal term, meaning that the name of the business or operation does not include the legal name of its proprietor, the names of all partners, or the official registered name of the limited partnership or corporation that... Harris County is a county located in the U.S. state of Texas within the Houston–Sugar Land–Baytown metropolitan area. ...

Contents

Early history

Enron traces its roots to the Northern Natural Gas Company, which was formed in 1932 in Omaha, Nebraska. It was reorganized in 1979 as the leading subsidiary of a holding company, InterNorth. In 1985, it bought the smaller Houston Natural Gas and changed its name to Enron in the process.[2] Omaha redirects here. ... Also: 1979 by Smashing Pumpkins. ... For the band, see Big Brother and the Holding Company. ... InterNorth Inc. ... This article is about the year. ... This article needs to be wikified. ...


The merged company initially named itself "HNG/InterNorth Inc.", even though InterNorth was the nominal survivor. It built a large headquarters complex in Omaha. However, the departure of ex-InterNorth CEO Samuel Segnar six months after the merger allowed former HNG CEO Kenneth Lay to become CEO of the newly merged company. Lay soon moved Enron's headquarters to Houston and began to thoroughly re-brand the business. Lay originally favored the name "Enteron" (possibly spelled in camelcase as "EnterOn"); but when it was pointed out that the term approximated a Greek word referring to the intestine, it was quickly shortened to "Enron." The final name was decided upon only after business cards, stationery, and other items had been printed reading Enteron, reflecting the confused state of affairs in the company at the time. Enron's famous "tilted E" logo was designed by the late American graphic designer Paul Rand. Kenneth Lee Ken Lay (April 15, 1942 – July 5, 2006) was an American businessman, best known for his role in the widely-reported corruption scandal that led to the downfall of Enron Corporation. ... Houston redirects here. ... This article does not cite any references or sources. ... In anatomy, the intestine is the segment of the alimentary canal extending from the stomach to the anus and, in humans and other mammals, consists of two segments, the small intestine and the large intestine. ... Graphic design is the applied art of arranging image and text to communicate a message. ... Paul Rand (born Peretz Rosenbaum, August 15, 1914 – November 26, 1996) was a well-known American graphic designer, best known for his corporate logo designs. ...


Enron was originally involved in transmitting and distributing electricity and gas throughout the United States and developing, building, and operating power plants, pipelines, and it also dealt with rule of law and other infrastructure worldwide. Enron owned a large network of natural gas pipelines which stretched ocean to ocean and border to border including Northern Natural Gas, Florida Gas Transmission, Transwestern Pipeline company and a partnership in Northern Border Pipeline from Canada. These were the cash cows that made all of the other ENRON companies, ventures and investments possible. They were the only part of ENRON that made significant profits. In 1998, Enron moved into the water sector, creating the Azurix Corporation, which it part-floated on the New York Stock Exchange (NYSE) in June 1999. Azurix failed to break into the water utility market, and one of its major concessions, in Buenos Aires, was a large-scale money-loser. In April 2001, Enron announced A power station (also power plant) is a facility for the generation of electric power. ... Categories: Stub | Water | Sewerage | Industries ... Azurix Corp. ... The New York Stock Exchange (NYSE), nicknamed the Big Board, is a New York City-based stock exchange. ... For other uses, see Buenos Aires (disambiguation). ...


Enron grew wealthy, it claimed, via its pioneering, due largely to marketing and promoting power and communications bandwidth commodities and related derivatives as tradable financial instruments, including exotic items such as weather derivatives. Enron was named "America's Most Innovative Company" by Fortune magazine for six consecutive years, from 1996 to 2001. It was on the Fortune's "100 Best Companies to Work for in America" list in 2000, and had offices that were, in hindsight, stunning in their opulence. Enron was hailed by many, including labor and the workforce, as an overall great company, praised for its large long-term pensions, benefits for its workers and extremely effective management until its exposure in corporate fraud. The first analyst to publicly disclose Enron's financial flaws was Daniel Scotto who in August 2001 issued a report entitled "All Stressed up and no place to go" which encouraged investors to sell Enron stocks and bonds at any and all costs. Next big thing redirects here. ... Wikibooks has more about this subject: Marketing Scale model of a Wheaties cereal box at a pep rally Promotion is one of the four key aspects of the marketing mix. ... For other uses, see Communication (disambiguation). ... Bandwidth is the difference between the upper and lower cutoff frequencies of, for example, a filter, a communication channel, or a signal spectrum, and is typically measured in hertz. ... The word commodity has a different meaning in business than in Marxian political economy. ... Derivatives traders at the Chicago Board of Trade. ... Financial instruments package financial capital in readily tradeable forms - they do not exist outside the context of the financial markets. ... Weather derivatives are financial instruments that can be used by organizations or individuals as part of a risk management strategy to reduce risk associated with adverse or unexpected weather conditions. ... Categories: Magazines stubs | Time Warner subsidiaries | Business magazines ... A vitality curve is a leadership construct, assigning credit with certain proportions of the production to proportions of a producing population. ... Daniel Dan Scotto is an American financial analyst. ...


As was later discovered, many of Enron's recorded assets and profits were inflated, or even wholly fraudulent and nonexistent. Debts and losses were put into entities formed "offshore" that were not included in the firm's financial statements, and other sophisticated and arcane financial transactions between Enron and related companies were used to take unprofitable entities off the company's books. Historical financial statement Financial statements (or financial reports) are formal records of a business financial activities. ...


Its most valuable asset and the largest source of honest income, the 1930s-era Northern Natural Gas, was eventually purchased back by a group of Omaha investors, who moved its headquarters back to Omaha, and is now a unit of Warren Buffett's Mid-American Energy Holdings Corp. NNG was put up as collateral for a $2.5 billion capital infusion by Dynegy Corporation when Dynegy was planning to buy Enron. When Dynegy looked closely at Enron's books, they backed out of the deal and fired their CEO, Chuck Watson. The new chairman and interim CEO, the late Daniel Dienstbier, had been president of NNG and an Enron executive at one time and an acquaintance of Warren Buffett. NNG continues to be profitable today. Warren Edward Buffett (born August 30, 1930, in Omaha, Nebraska) is an American investor, businessman and philanthropist. ... Dynegy is a large operator of power plants and a player in the natural gas liquids business, based in Houston, Texas. ...


Products

Enron traded in more than 30 different products including the following.

It was also an extensive futures trader, including sugar, coffee, grains, hog, and other meat futures. At the time of its bankruptcy filing in December, 2001, Enron was structured into seven distinct business units. A petrochemical is any chemical derived from fossil fuel. ... For other uses, see Plastic (disambiguation). ... For delivered electrical power, see Electrical power industry. ... International Paper Company Wood pulp is the most common material used to make paper. ... For other uses, see Steel (disambiguation). ... Synthetic motor oil being poured. ... Broadband in telecommunications is a term that refers to a signaling method that includes or handles a relatively wide range of frequencies, which may be divided into channels or frequency bins. ... Damaged package The Panama canal. ... Freight is a term used to classify the transportation of cargo and is typically a commercial process. ... Impact from a water drop causes an upward rebound jet surrounded by circular capillary waves. ... Wastewater is any water that has been adversely affected in quality by anthropogenic influence. ... In finance, a futures contract is a standardized contract, traded on a futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a specified price. ...


Online marketplace services

  • EnronOnline (commodity trading platform)
  • ClickPaper (transaction platform for pulp, paper, and wood products)
  • EnronCredit (the first global online credit department to provide live credit prices and enable business-to-business customers to hedge credit exposure instantly via the Internet.)
  • ePowerOnline (customer interface for Enron Broadband Services)
  • Enron Direct (sales of fixed-price contracts for gas and electricity; Europe only)
  • EnergyDesk (energy-related derivatives trading; Europe only)
  • NewPowerCompany (online energy trading, joint venture with IBM and AOL)
  • Enron Weather (weather derivatives)
  • DealBench (online business services)
  • Water2Water (water storage, supply, and quality credits trading)
  • HotTap (customer interface for Enron's U.S. gas pipeline businesses)
  • EnronStrommarkt (business to business pricing and information platform; Germany only)

For other uses, see IBM (disambiguation) and Big Blue. ... For other uses, see AOL (disambiguation). ...

Broadband services

  • Enron Intelligent Network (broadband content delivery)
  • Enron Media Services (risk management services for media content companies)
  • Customizable Bandwidth Solutions (bandwidth and fiber products trading)
  • Streaming Media Applications (live or on-demand Internet broadcasting applications)

Energy and commodities services

  • Enron Power (electricity wholesaling)
  • Enron Natural Gas (natural gas wholesaling)
  • Enron Pulp and Paper, Packaging, and Lumber (risk management derivatives for forest products industry)
  • Enron Coal and Emissions (coal wholesaling and CO2 offsets trading)
  • Enron Plastics and Petrochemicals (price risk management for polymers, olefins, methanol, aeromatics, and natural gas liquids)
  • Enron Weather Risk Management (weather derivatives)
  • Enron Steel (financial swap contracts and spot pricing for the steel industry)
  • Enron Crude Oil and Oil Products (petroleum hedging)
  • Enron Wind Power Services (wind turbine manufacturing and wind farm operation)
  • MG Plc. (U.K. metals merchant)

Capital and risk management services

Commercial and industrial outsourcing services

  • Commodity Management
  • Energy Asset Management
  • Energy Information Management
  • Facility Management
  • Capital Management
  • Azurix Inc. (water utilities and infrastructure)

Azurix Corp. ...

Project development and management services

  • Energy Infrastructure Development (developing, financing, and operation of power plants and related projects)
  • Enron Global Exploration & Production Inc. (oil and natural gas field services)
  • Elektro Eletricidade e Servicos SA (Brazilian electric utility)

Energy transportation and upstream services

Enron manufactured gas valves, circuit breakers, thermostats, and electrical equipment in Venezuela through INSELA SA, a 50-50 joint venture with General Electric. Enron owned three paper and pulp products companies: Garden State Paper, a newsprint mill; as well as Papiers Stadacona and St. Aurelie Timberlands. Enron held a controlling stake in the Louisiana-based petroleum exploration and production company Mariner Energy. Northern Border Pipeline is a natural gas pipeline which brings gas from Canada through Montana, North Dakota, South Dakota, Minnesota, and Iowa into the Chicago area. ... Transwestern Pipeline is a natural gas pipeline which brings gas from the San Juan Basin and Permian Basin to either California and Arizona or to the Oklahoma panhandle. ... Florida Gas Transmission is a natural gas pipeline which brings gas from Texas, Louisiana, Mississippi, and Alabama into Florida. ... Enron Corporation is an energy company based in Houston, Texas. ... GE redirects here. ...


EnronOnline

The front page of EnronOnline

In November 1999, Enron launched EnronOnline. Conceptualized by the company's Global Finance department under John Siepierski, it was the first web-based transaction system that allowed buyers and sellers to buy, sell, and trade commodity products globally. It allowed users to do business only with Enron. Due to the huge cash needs of Enron Online, and the firm wasting money in other areas such as broadband, Azurix, Enron Energy Services, and shutting down the original pipeline service which generated cash flow, Enron virtually drained itself of cash. The Enron Global Finance department had to keep working up more creative financing moves to keep the company running. Image File history File links Enron Online screen shot. ... Azurix Corp. ... Enron Energy Services (EES) was a business unit of Enron Corporation, whose purpose was to provide gas, electricity, and energy management directly to businesses and homes. ...


EnronOnline went live on November 29, 1999. The site allowed energy users to do business in a previously unseen way. Until this point a trader who wanted to buy an energy contract talked with another energy trader who wanted to sell a contract, and from there, terms were agreed. EnronOnline allowed market participants to see prices on their screen just like a stock ticker, and could do business far more simply. is the 333rd day of the year (334th in leap years) in the Gregorian calendar. ... Events of 2008: (EMILY) Me Lesley and MIley are going to China! This article is about the year. ... This article is about economic exchange. ... A contract is a legally binding exchange of promises or agreement between parties that the law will enforce. ... Look up Market in Wiktionary, the free dictionary. ... The board and equipment for Stock Ticker Stock Ticker is a now out of print board game that was popular upon its release and is still played today. ...


The main commodities offered on EnronOnline were natural gas and electricity, although there were 500 other products including credit derivatives, bankruptcy swaps, pulp, gas, plastics, paper, steel, metals, freight, and TV commercial time. For other uses, see Natural gas (disambiguation). ... Electricity (from New Latin Ä“lectricus, amberlike) is a general term for a variety of phenomena resulting from the presence and flow of electric charge. ... // A credit derivative is a financial instrument or derivative (finance) whose price and value derives from the creditworthiness of the obligations of a third party, which is isolated and traded. ... For other uses, see Plastic (disambiguation). ... For other uses, see Paper (disambiguation). ... For other uses, see Steel (disambiguation). ... This article is about metallic materials. ... Freight is a term used to classify the transportation of cargo and is typically a commercial process. ... The examples and perspective in this article or section may not represent a worldwide view. ...


EnronOnline was seen as an impressive tool, but because Enron was either buying, selling, or trading in every transaction, the costs increased over time, and the systems were involved in the financial misreporting and other questionable financial behavior that eventually led to Enron's demise. However, EnronOnline spawned several other e-commerce websites including www.DealBench.com. DealBench is an acquisition and divestiture tool still operating today. As of 2007, Enron still operates the DealBench code under the name EnronAssets. Other Enron developed technologies include Commodity Logic, ClickPaper and EnronCredit. EnronCredit was the first global online credit department to provide live credit prices and enable business-to-business customers to hedge credit exposure instantly via the Internet. ...


EnronOnline closed down for online trading on the morning of November 28, 2001, with Enron filing for bankruptcy four days later. is the 332nd day of the year (333rd in leap years) in the Gregorian calendar. ... This article is about the year. ... Notice of closure stuck on the door of a computer store the day after its parent company, Granville Technology Group Ltd, declared bankruptcy (strictly, put into administration—see text) in the United Kingdom. ...


Principal assets

At the time of bankruptcy, Enron owned all of or interests in the following major assets:


Power plants

Enron owned or operated 38 electric power plants worldwide:

  • Teesside (United Kingdom)—at the time of commission in 1992, at 1750 MW, was the largest Natural Gas Co-Gen plant in the world. Its on-time and under-budget completion put Enron Power on the map as an international developer, owner and operator.
  • Bahia Las Minas (Panama)- largest thermal power plant in Central America, 355 MW
  • Puerto Quetzal Power Project (Guatemala)—110 MW
  • PQP LLC (Guatemala)—holding company for 124 MW Power Barge named "Esperanza"
  • Empresa Energetica Corinto (Nicaragua)—holding company for "Margarita II" 70.5 MW power barge, Enron held 35% share
  • EcoElectrica (Puerto Rico, USA)—507 MW natural gas cogeneration plant, with adjacent LNG import terminal- supplied 20% of island's electricity
  • Puerto Plata Power Project (Dominican Republic)—185 MW power barge named "Puerto Plata"
  • Modesto Maranzana Power Plant (Argentina)—70 MW
  • Cuiaba Integrated Project (Brazil)—480 MW combined cycle power plant
  • Nowa Sarzyna Power Plant (Poland)—116 MW, first privately developed post-Communist electricity project in Poland
  • Sarlux Power Project (Italy)—551 MW combined cycle power plant, converted residue from Italy's largest oil refinery into synthetic gas for fuel
  • Trakya Power Project (Turkey)—478 MW
  • Chengdu Cogen Project (China)—284 MW, joint venture with Sichuan Electric Company
  • Northern Marianas Power Project (Guam, USA)—80 MW slow speed diesel oil plant
  • Batangas Power Project (Philippines)—110 MW
  • Subic Bay Power Project (Philippines)—116 MW
  • Dabhol Power Project(India)—2,184 MW combined cycle plant, generally considered one of Enron's most controversial and least successful projects
  • Storm Lake Wind Generation Project (Iowa, USA)—193 MW wind farm
  • Lake Benton II Wind Generation Facility (Minnesota, USA)—104 MW wind farm
  • Lake Benton I Wind Generation Facility (Minnesota, USA)—107 MW wind farm
  • Cabazon Wind Generation Facility (California, USA)—40 MW wind farm
  • Green Power I Wind Generation Facility (California, USA)—16.5 MW wind farm
  • Indian Mesa I Wind Generation Facility (Texas, USA)—25.5 MW wind farm
  • Clear Sky Wind Power Generation Facility (Texas, USA)—135 MW wind farm
  • Mill Run Wind Wind Power Generation Facility (Pennsylvania, USA)—15 MW wind farm
  • Trent Mesa Wind Generation Facility (Texas, USA)—150 MW wind farm
  • Montfort Wind Generation Facility (Wisconsin, USA)—30 MW wind farm
  • 8 hydroelectric plants in Oregon with a combined capacity of 509 MW, owned through Portland General Electric
  • 4 additional thermal plants in Oregon and Montana with a combined capacity of 1,464 MW, owned through Portland General Electric

There are very few or no other articles that link to this one. ... Dabhol Power Plant The Dabhol Power Company was a company based in India and was made to manage and operate the Dabhol Power Plant. ... Portland General Electric (PGE) is an investor-owned electrical utility that distributes electricity to customers in parts of Portland, Oregon, as well as parts of Multnomah, Clackamas, Marion, Yamhill, Washington, and Polk counties - half of the inhabitants of Oregon. ... Portland General Electric (PGE) is an investor-owned electrical utility that distributes electricity to customers in parts of Portland, Oregon, as well as parts of Multnomah, Clackamas, Marion, Yamhill, Washington, and Polk counties - half of the inhabitants of Oregon. ...

Pipelines

  • Centragas (Colombia)—357 miles, natural gas
  • Promigas (Colombia)
  • Transportadora de Gas del Sur (Argentina)—largest pipeline system in South America, 5,005 km
  • CEG (Brazil)—1,368 miles, natural gas
  • CEGRio (Brazil)
  • Transredes (Bolivia)—3,000 km natural gas pipeline and 2,500 km oil & liquids pipeline
  • Bolivia-to-Brazil Pipeline (Bolivia/Brazil)—3,000 km, natural gas
  • Northern Natural Gas (Upper Midwestern USA)—16,500 miles, included share in Trailblazer Pipeline
  • Transwestern Pipeline (Texas, Arizona, New Mexico, Colorado)—2,554 miles
  • Florida Gas Transmission (Texas, Louisiana, Alabama, Mississippi, Florida)—4,800 miles
  • Northern Border Pipeline (Indiana, Illinois, Iowa, South Dakota, North Dakota, Montana )—1,249 miles

Electric utilities/distributors

  • Portland General Electric Company (USA)—serving 775,000 customers in Oregon
  • Elektro Electricidade e Servicos S.A. (Brazil)—1.5 million customers
  • Compania Anonima Luz y Fuerza Electricas de Puerto Cabello (Venezuela)—50,000 customers

Natural gas-related businesses

  • ProCaribe (Puerto Rico, USA)—LPG storage terminal, only fully refrigerated LPG storage facility in Caribbean
  • San Juan Gas Company (Puerto Rico, USA)—gas distribution, 400 industrial/commercial customers
  • Industrial Gases Ltd. (Jamaica)—8 filling plants, industrial gas manufacturing & LPG distribution, held 100% monopoly on Jamaican industrial gas business and 40% of LPG business
  • Gaspart (Brazil)—consortium of 7 gas distribution companies
  • Vengas (Venezuela)—LPG transportation and distribution
  • SK-Enron Company Ltd. (South Korea)—joint venture with SK Corporation; included 8 city gas utilities, an LPG distributor, and a steam and electricity cogeneration facility

SK Corporation (KSE: 3600) is a Korean-based Chaebol or conglomerate. ...

Pulp and paper

  • Garden State Paper Company Inc. (New Jersey, USA)—paperboard and newsprint recycling mill
  • Papiers Stadacona Ltee. (Quebec, Canada)—wood pulp & paper mill
  • St. Aurelie Timberlands Company Ltd. (Quebec, and New Brunswick, Canada & Maine, USA)—timber company

Other

  • Mariner Energy Inc. (Houston, Texas, USA)—oil & gas exploration, development, and production with operations in the Gulf of Mexico
  • Interruptores Especializados Lara (Venezuela)—manufacturer of valves, thermostats, and electrical breakers for appliances
  • Enron Wind—manufacturer of wind power turbines and related systems, with factories in USA, Spain, and Germany

Accounting scandal of 2001

Main article: Enron scandal

After a series of revelations involving irregular accounting procedures bordering on fraud perpetrated throughout the 1990s involving Enron and its accounting firm Arthur Andersen, Enron stood on the verge of undergoing the largest bankruptcy in history by mid-November 2001. A white knight rescue attempt by a similar, smaller energy company, Dynegy, was not viable. The Enron scandal was a financial scandal that was revealed in late 2001. ... For the U.S. Supreme Court case commonly known as Arthur Andersen, see Arthur Andersen LLP v. ... In business, a white knight may be a corporation, a private company, or a person that intends to help another firm. ... Dynegy is a large operator of power plants and a player in the natural gas liquids business, based in Houston, Texas. ...


As the scandal was revealed, Enron shares dropped from over US$90.00 to just pennies. Enron had been considered a blue chip stock, so this was an unprecedented and disastrous event in the financial world. Enron's plunge occurred after it was revealed that much of its profits and revenue were the result of deals with special purpose entities (limited partnerships which it controlled). The result was that many of Enron's debts and the losses that it suffered were not reported in its financial statements. A blue chip stock is the stock of a well-established company having stable earnings and no extensive liabilities. ... A special purpose entity (SPE) (sometimes, especially in Europe, special purpose vehicle) is a body corporate (usually a limited company of some type or, sometimes, a limited partnership) created to fulfill narrow, specific or temporary objectives, primarily to isolate financial risk, usually bankruptcy but sometimes a specific taxation or regulatory... A limited partnership is a form of partnership similar to a general partnership, except that in addition to one or more general partners (GPs), there are one or more limited partners (LPs). ... Historical financial statement Financial statements (or financial reports) are formal records of a business financial activities. ...


Enron filed for bankruptcy on December 2, 2001. In addition, the scandal caused the dissolution of Arthur Andersen, which at the time was one of the world's top accounting firms. The firm was found guilty of obstruction of justice in 2002 for destroying documents related to the Enron audit and was forced to stop auditing public companies. Although the conviction was thrown out in 2005 by the Supreme Court, the damage to the Andersen name has prevented it from returning as a viable business. is the 336th day of the year (337th in leap years) in the Gregorian calendar. ... This article is about the year. ... For the U.S. Supreme Court case commonly known as Arthur Andersen, see Arthur Andersen LLP v. ... Modern Obstruction of Justice, in a common law state, refers to the crime of offering interference of any sort to the work of police, investigators, regulatory agencies, prosecutors, or other (usually government) officials. ... Year 2005 (MMV) was a common year starting on Saturday (link displays full calendar) of the Gregorian calendar. ... The Supreme Court of the United States (sometimes colloquially referred to by the acronym SCOTUS[1]) is the highest judicial body in the United States and leads the federal judiciary. ...


Enron also withdrew a naming rights deal with the Houston Astros Major League Baseball club to have its name associated with their new stadium, which was formerly known as Enron Field (it is now Minute Maid Park.) Major league affiliations National League (1962–present) Central Division (1994–present) Current uniform Retired Numbers 5, 24, 25, 32, 33, 34, 40, 42, 49 Name Houston Astros (1965–present) Houston Colt . ... Major Leagues redirects here. ... Minute Maid Park (formerly Enron Field and Astros Field) is a baseball stadium in Houston, Texas, that opened in 2000 to house the Houston Astros. ...


Accounting practices

Enron had created offshore entities, units which may be used for planning and avoidance of taxes, raising the profitability of a business. This provided ownership and management with full freedom of currency movement, and full anonymity, that would hide losses that the company was taking. These entities made Enron look more profitable than it actually was, and created a dangerous spiral in which each quarter, corporate officers would have to perform more and more contorted financial deception to create the illusion of billions in profits while the company was actually losing money. This practice drove up their stock price to new levels, at which point the executives began to work on insider information and trade millions of dollars worth of Enron stock. The executives and insiders at Enron knew about the offshore accounts that were hiding losses for the company; however the investors knew nothing of this. Chief Financial Officer Andrew Fastow led the team which created the off-books companies, and manipulated the deals to provide himself, his family, and his friends with hundreds of millions of dollars in guaranteed revenue, at the expense of the corporation he worked for and its stockholders.


In 1999, Enron launched EnronOnline, an Internet-based trading operation, which was used by virtually every energy company in the U.S. President and chief operating officer Jeffrey Skilling began advocating a novel idea: the company didn't really need any "assets." By pushing the company's aggressive investment strategy, he helped make Enron the biggest wholesaler of gas and electricity, with $27 billion traded in a quarter. The firm's figures, however, had to be accepted at face value. Under Skilling, Enron adopted mark to market accounting, in which anticipated future profits from any deal were tabulated as if real today. Thus, Enron could record gains from what over time might turn out losses, as the company's fiscal health became secondary to manipulating its stock price on Wall Street during the Tech boom. But when a company's success is measured by agreeable financial statements emerging from a black box, a term Skilling himself admitted, actual balance sheets prove inconvenient. Indeed, Enron's unscrupulous actions were often gambles to keep the deception going and so push up the stock price, which was posted daily in the company elevator. An advancing number meant a continued infusion of investor capital on which debt-ridden Enron in large part subsisted. Its fall would collapse the house of cards. Under pressure to maintain the illusion, Skilling verbally attacked Wall Street Analyst Richard Grubman[3], who questioned Enron's unusual accounting practice during a recorded conference call. When Grubman complained that Enron was the only company that could not release a balance sheet along with its earnings statements, Skilling replied "Well, thank you very much, we appreciate that . . . asshole." Though the comment was met with dismay and astonishment by press and public, it became an inside joke among many Enron employees, mocking Grubman for his perceived meddling rather than Skilling's lack of tact. When asked during trial in the street, Skilling wholeheartedly admitted that industrial dominance and abuse was a global problem: "Oh yes, yes sure, it is."[1] [4] The front page of EnronOnline EnronOnline was considered by many to be the first very successful e-commerce website. ... Jeffrey Keith Jeff Skilling (born November 25, 1953) was the CEO of Enron Corporation in 2001. ... In economics, mark to market is the act of assigning a value to a position held in a tradeable financial instrument based on the current market price for that instrument. ... Elaborate marble facade of NYSE as seen from the intersection of Broad and Wall Streets For other uses, see Wall Street (disambiguation). ... Dot-com (also dotcom or redundantly dot. ... This is a disambiguation page — a navigational aid which lists other pages that might otherwise share the same title. ... This article is about a television show. ...


Peak and decline of stock price

In August of 2000, Enron's stock price hit its highest value of $90.[5] At this point Enron executives, who possessed the inside information on the hidden losses, began to sell their stock. At the same time, the general public and Enron's investors were told to buy the stock. Executives told the investors that the stock would continue to climb until it reached possibly the $130 to $140 range, while secretly unloading their shares.


As executives sold their shares, the price began to drop. Investors were told to continue buying stock or hold steady if they already owned Enron because the stock price would rebound in the near future. Kenneth Lay's strategy for responding to Enron's continuing problems was in his demeanor. As he did many times, Lay would issue a statement or make an appearance to calm investors and assure them that Enron was headed in the right direction.


By August 15, 2001, Enron's stock price had fallen to $42. Many of the investors still trusted Lay and believed that Enron would rule the market. They continued to buy or hold their stock and lost more money every day. As October closed, the stock had fallen to $15. Many saw this as a great opportunity to buy Enron stock because of what Lay had been telling them in the media. Their trust and optimism proved to be greatly misplaced.


Lay has been accused of selling over $70 million worth of stock at this time, which he used to repay cash advances on lines of credit. He sold another $20 million worth of stock in the open market. Also, Lay's wife, Linda, has been accused of selling 500,000 shares of Enron stock totaling $1.2 million on November 28, 2001. The money earned from this sale did not go to the family but rather to charitable organizations, which had already received pledges of contributions from the foundation. Records show that Mrs. Lay placed the sale order sometime between 10:00 and 10:20 AM. News of Enron's problems, including the millions of dollars in losses they had been hiding went public about 10:30 that morning, and the stock price soon fell to below one dollar. Former Enron executive Paula Rieker has been charged with criminal insider trading. Rieker obtained 18,380 Enron shares for $15.51 a share. She sold that stock for $49.77 a share in July 2001, a week before the public was told what she already knew about the $102 million loss.


Post-bankruptcy

Enron initially planned to retain its three pipeline companies as well as most of its overseas assets. However, before emerging from bankruptcy, Enron spun off its pipeline companies as CrossCountry Energy.


Shortly after emerging from bankruptcy in November 2004, Enron's new board of directors sued 11 financial institutions for helping Lay, Fastow, Skilling and others hide Enron's true financial condition. Among the defendants were Royal Bank of Scotland, Deutsche Bank and Citigroup. As of 2008, Enron has settled with all of the institutions except Citigroup. A final settlement with Citigroup is pending approval by a judge. The Royal Bank of Scotland Plc (Scottish Gaelic: [1]) is one of the retail banking subsidiaries of Royal Bank of Scotland Group plc, which together with NatWest, provides branch banking facilities in the United Kingdom. ... Deutsche Bank AG (pronounced [2]) (ISIN: DE0005140008, NYSE: DB) (literal translation - German Bank) is a leading global investment bank with a broad private clients franchise, headquartered in Frankfurt, Germany. ... Citi redirects here. ... 2008 (MMVIII) will be a leap year starting on Tuesday of the Gregorian calendar. ...


Enron sold its last business, Prisma Energy, in 2006, leaving it as an asset-less shell. In early 2007, it changed its name to Enron Creditors Recovery Corporation. Its goal is to pay off the old Enron's remaining creditors and wind up Enron's affairs.


California's deregulation and subsequent energy crisis

See also: California electricity crisis

In October 2000, Daniel Scotto, the top ranked utility analyst on Wall Street, suspended his ratings on all energy companies conducting business in California due to the unlikely probability that the companies would receive full and adequate compensation for the deferred energy accounts used as the cornerstone for the California Deregulation Plan enacted in the late 1990s. Five months later, Pacific Gas & Electric (PG&E) was forced into bankruptcy. Congressman Phil Gramm, the second largest recipient of campaign contributions from Enron, succeeded in legislating California's energy commodity trading deregulation. Despite warnings from prominent consumer groups which stated that this law would give energy traders too much influence over energy commodity prices, the legislation was passed in December 2000. The California electricity crisis (also known as the Western Energy Crisis) of 2000 and 2001 resulted from the gaming of a partially deregulated California energy system by energy companies such as Enron and Reliant Energy. ... Daniel Dan Scotto is an American financial analyst. ... Elaborate marble facade of NYSE as seen from the intersection of Broad and Wall Streets For other uses, see Wall Street (disambiguation). ... This article is about the U.S. state. ... Pacific Gas and Electric Company (PG&E) is the utility that provides power to most of Northern California. ... William Philip Phil Gramm (born July 8, 1942, in Fort Benning, Georgia) served as a Democratic Congressman (1978–1983), a Republican Congressman (1983–1985) and a Republican Senator from Texas (1985–2002). ... “Electioneering” redirects here. ...


As Public Citizen reported, "Because of Enron’s new, unregulated power auction, the company’s 'Wholesale Services' revenues quadrupled—from $12 billion in the first quarter of 2000 to $48.4 billion in the first quarter of 2001."[6] Public Citizen is a U.S. non-governmental organization, founded by Ralph Nader in 1971 and based in Washington, DC. Its activities span across a diverse range of issues, including energy policy, trade policy, campaign finance reform and accountability, consumer protection, medical malpractice, and public health. ...


Before passage of the deregulation law, there had been only one Stage 3 rolling blackout declared. Following passage, California had a total of 38 blackouts defined as Stage 3 rolling blackouts, until federal regulators intervened in June 2001. These blackouts occurred mainly as a result of a poorly designed system that was manipulated by traders and marketers. Enron traders were revealed as intentionally encouraging the removal of power from the market during California's energy crisis by encouraging suppliers to shut down plants to perform unnecessary maintenance, as documented in recordings made at the time.[7] These acts contributed to the need for rolling blackouts, which adversely affected many businesses dependent upon a reliable supply of electricity, and inconvenienced a large number of retail consumers. Rolling blackout refers to an intentionally-engineered electrical power outage, caused by insufficient available resources to meet prevailing demand for electricity. ...


References

  1. ^ BBC NEWS | Business | Andersen guilty in Enron case
  2. ^ BBC News | Enron: The rise and fall
  3. ^ "Skilling comes out swinging", Money/CNN, April 10, 2006. 
  4. ^ Beth MacLean and Peter Elkind , Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, 2003, ISBN 1591840082
  5. ^ http://business.nmsu.edu/~dboje/papers/ENRON_2.jpg
  6. ^ Blind Faith: How Deregulation and Enron’s Influence Over Government Looted Billions from Americans
  7. ^ Tapes Show Enron Caused Rolling Blackouts in California

Bibliography

  • Robert Bryce, Pipe Dreams: Greed, Ego, and the Death of Enron (PublicAffairs, 2002) ISBN 1-58648-138-X
  • Lynn Brewer, Matthew Scott Hansen, House of Cards, Confessions of An Enron Executive (Virtualbookworm.com Publishing, 2002) ISBN 1-58939-248-5 ISBN 1-58939-248-5
  • Kurt Eichenwald, Conspiracy of Fools: A True Story (Broadway Books, 2005) ISBN 0-7679-1178-4
  • Peter C. Fusaro, Ross M. Miller, What Went Wrong at Enron: Everyone's Guide to the Largest Bankruptcy in U.S. History (Wiley, 2002), ISBN 0-471-26574-8
  • Loren Fox, Enron: The Rise and Fall. (Hoboken, N.J.: Wiley, 2003)
  • Judith Haney Enron's Bust: Was it the result of Over-Confidence or a Confidence Game? USNewsLink/ December 13, 2001
  • Marc Hodak, The Enron Scandal, Organizational Behavior Research Center Papers (SSRN), June 4, 2007
  • Bethany McLean, Peter Elkind, Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron (Portfolio, 2003) ISBN 1-59184-008-2
  • Mimi Swartz, Sherron Watkins, Power Failure: The Inside Story of the Collapse of Enron (Doubleday, 2003) ISBN 0-385-50787-9
  • Daniel Scotto "American Financial Analyst: The First Analyst to recommend the selling of Enron Stock"

Robert Bryce was the author of Pipe Dreams: Greed, Ego, and the Death of Enron (PublicAffairs, 2002) ISBN 158648138X Category: ... Lynn Brewer, known as EddieLynn Morgan before her marriage, is the author of the book Confessions of an Enron Executive: A Whistleblowers Story [1]. She is also the founder of the Integrity Institute which provides analytical research and education in the area of structural integrity, and she speaks at... Kurt Alexander Eichenwald (born June 28, 1961) was a writer and investigative reporter at The New York Times newspaper until October 2006, when he resigned to become an investigative reporter with Condé Nasts forthcoming business magazine, Portfolio -- which plans to mail out its premier issue in late April 2007. ... Conspiracy of Fools is a book by Kurt Eichenwald detailing the Enron scandal. ... is the 347th day of the year (348th in leap years) in the Gregorian calendar. ... This article is about the year. ... is the 155th day of the year (156th in leap years) in the Gregorian calendar. ... Year 2007 (MMVII) was a common year starting on Monday of the Gregorian calendar in the 21st century. ... Bethany McLean in the movie Enron: The Smartest Guys in the Room. Bethany McLean (born 1971) is a senior editor and business writer for Fortune magazine and is best known as the co-author, with Fortune colleague Peter Elkind, of Enron: The Smartest Guys in the Room, exposing the corrupt... Sherron Watkins (born August 28, 1959 in Tomball, Texas) was Vice President of the Enron Corporation. ... Daniel Dan Scotto is an American financial analyst. ...

External links

Data


  Results from FactBites:
 
Enron Corp. – News, trials and the history of the scandal | Chron.com - Houston Chronicle (602 words)
Enron Corp. – News, trials and the history of the scandal
Vanessa D. Gimore, United States District Judge for the Southern District of Texas, poses for a portrait in her chambers at the Federal Courthouse Wednesday, Sept. 20, 2006, in Houston.
Enron Corp. – The financial collapse, bankruptcy and trials surrounding Houston’s biggest corporate scandal.
Enron - Wikipedia, the free encyclopedia (4501 words)
Enron was originally involved in the transmission and distribution of electricity and gas throughout the United States and the development, construction, and operation of power plants, pipelines, and other infrastructure worldwide.
Enron's global reputation was undermined by persistent rumours of bribery and political pressure to secure contracts in Central America, South America, Africa, and the Philippines.
Enron's plunge occurred after it was revealed that much of its profits and revenue were the result of deals with special purpose entities (limited partnerships which it controlled).
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