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Enron

Enron

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  • 1. Presentation By:
  • 2.  Former Type : Public Company Industry : Energy Founded : Omaha, Nebraska (1985) Founder(s) : Kenneth Lay Defunct December 2, 2001 Headquarters Houston , United States Key People Kenneth Lay, Founder,chairmanAnd CEO Jeffrey Skilling,former President, CEO And COO And Andrew Fastow, Former CFO Revenue $ 101 Billion (2000) Employees 22,000 (2000) {Approx.}
  • 3.  One Of The Worlds Leading Supplier OfElectricity, Natural Gas, Communications, AndPulp And Paper .Development Of Power Plants ,Pipelines .CEO , CFO And Chairman Transformed EnronDramatic GrowthFortune Named Enron "Americas MostInnovative Company" For Six Consecutive Years
  • 4.  1985 : Houston Natural Gas Merges With Omaha Based Internorth Forming Enron Corporation. 2000 : Annual Revenue Touched $100 Billion And Acknowledged As The Sixth Largest Energy Company . August 2001: The CEO Resigns And Lay Takes Over As The New CEO
  • 5. Bankruptcy Filing Came After Series OfRevelations That Giant Energy TraderHad Been Using Special Purpose EntitiesCompany’s CFO In 2001 Stated ThatEnron Has Established SPEs To MoveAssets And Debt Off Its Balance SheetAnd To Increase Cash Flow.According To John, a University LawProfessor ,Once SPE Is Formed By Enron,It Will Then Borrow Debt From BanksAnd Enron Would Guarantee That Debt .
  • 6.  In reality SPE founded by ENRON were used as a means of storage,transportation,or other energy related operations. The cash flow of ENRON from its operations declined from positive 127 million dollar in 2000 to a negative of 753 million dollar in 2001. ENRON finally filed for bankruptcy on December 2,2002 after Dynergy terminated the deal when STANDARD AND POORS downgraded ENRON^S debt below investment grade.
  • 7.  In JUNE 2001,ENRON Vice President Sherron Watkins was given the task of finding some assets to sell off but it was very difficult for her. Watkins prepared a Memo regarding the various problems and placed it into the box but this Memo was not taken into consideration. On August 22,Watkins handed CEO Lay a seven page letter and told him that ENRON would implode in a wave of accounting scandals” if no
  • 8.  Against Watkins letter Lay, the CEO ,arranged to have a ENRON’S Law Firm Vinson and Elkins that looked after all questionable deals. Watkins continued to do her work and sold stock of 30000 dollar in August,2001 and some in late September. In February 2002,she revealed the various facts regarding ENRON partnerships and finally resigned in November. But Watkins Revealed iall the facts only after ENRON filed for bankruptcy.
  • 9.  The Board The Profits Legislation Conflict of Interest
  • 10.  Became the Chairman And Ceo in Feb,1986 He Drew Down His $4 Million enron credit line repeatedly and then repaid the company with the enron shares.
  • 11. Fastow`s Brighter Side Fastow joined Enron in 1990 And took it to soaring hieghts. His expertise awarded him CFO excellence award for capital structure management. He used to get support from enron `s president And COO jeffrey k skilling . Fastow`s Darker Side Fastow was accused of being mastermind behind the Enron`s scandal.
  • 12.  Fastow was accused of being mastermind behind the Enron`s scandal. He surrendered $30 million dollars in cash and also accepted 10 years . Lea Fastow , was al so a culprit .
  • 13.  Held equally responsible for “ the enron scandal ”Involvement In : Government deregulations Securities Fraud
  • 14.  Andersen Partner Complained About Fastow`s Plan To Contribute His Own Money Into Partnerships , Saying `Why Would Any Director In His Or Her Right Mind Ever Approve Such A Scheme?” ` Andersen Thought That “The Whole Thing Was A Bad Idea” But Is Convinced That This Is Such A Win- Win Thing, That Everyone Will Buy In.” The U.S. Government Asserted That, After Investigation Of Enron Began, Following Its Bankruptcy , Andersen Destroyed/Shredded Thousands Of Documents In Houston, Portland, London And Possibly Other Locations Andersen Was Convicted Of Felony Obstruction Of Justice And Ceased Auditing Public Companies In 2002; The Conviction Was Overturned.
  • 15.  Andersen Also Provided Consulting Services, Helping Set Up And Opine On The Validity Of Enron`s Spe`s Under Accounting Rules . Andersen Received $58 Million In Fees From Enron In 2000 (Less Than Half Of Which Was From Auditing Services) And $50-55 Million In 2001 . Documents Produced For Congressional Investigators Show That Partners In Andersen`s Houston Office Debated Whether To Force Disclosure Of Billions In Off- balance Sheet Debt, But Decided Against It, Citing Potential Growth Of Fees From Enron To $100 Million Per Year .
  • 16. Watkins allegations ofaccounting fraud.Professional misconduct bythe Charges by the texas bar.Legitimacy of EnroN`Sbusiness practices.
  • 17.  merrill lynch faced scrutiny by federal prosecutors and the sec for its role in enron`s 199o sale of nigerian barges . overstated statement about guaranteed rate of return . false statements and misleading information .
  • 18.  October 2001 : Securities And Exchange Act Launches A Formal Investigation Into Its “Related Party Transactions” November 8,2001 : Enron Restates Its Earning For First Three Quarters Of 2001 December 2, 2001 : Enron Files For Protection From Creditors In New York Bankruptcy Court December 3, 2001 : Lays Off Five Thousand Employees
  • 19. In 2002 January 9 : The Justice Department Announces That It Is Pursuing A Criminal Investigation Of Enron January 24 : The Hearings On Enron Begin February 4 : Improper Financial Transactions And Self Dealing October 31 : The CFO , Fastow Is Indicted Of Being The Mastermind Behind The Scandal .
  • 20. In 2003 February 3 : The Creditors Sue Lay And His Wife To Recover $70 Million In Transfers July 11 : It Settled Its Allegations Of SEC Paying $300 Million . January 14, 2004 : Fastow Agrees To Serve 10 Years In Prison . July 8 : Lay Surrenders After Being Indicted .
  • 21. INVESTOR LOSSES COLLAPSE OFELECTRICITY TRADING MARKET CROSS COUNTRY ENERGY CORPORATION.
  • 22. LIQIUDATION OF ASSETS. CANCELATION Of OuTSTANDING AND PREFERRED STOCK.
  • 23.  January 30 , 2006 : Lay And Skilling Trial Begins May 25 , 2006 : Lay And Skilling Are Convicted Of Conspircy To Commit Securities And Wire Fraud . Lay Convicted In A Separate Bank Case . July 5 : Lay Dies Of Heart Attack , Erasing His Conviction As A Person Who Dies Before An Appeal Is Not