Enron's fall by kishlay
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this ppt is about the enron"s fall... based on the case under business ethics !!!!

this ppt is about the enron"s fall... based on the case under business ethics !!!!

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Enron's fall by kishlay Presentation Transcript

  • 1. ENRON’S FALL
  • 2. SPARKS BY:
    KISHLAY RAJ
    ASHISH ZUTSHI
    PRIYA SAROHA
    ARPIT TOMARNALIN HOODA
  • 3. THE BRIEF!!!!
    • The case traces the rise of Enron, covering the company's business innovations, personnel management, and risk management processes. It then examines the company's dramatic fall including the extension of its trading model into questionable new businesses, the financial reporting problems, and governance breakdowns inside and outside the firm. The case offers students an opportunity to explore why Enron failed and to understand the systemic problems in governance that affected its board of directors, the audit committee, the external auditors, and financial analysts.
     
  • 4. SO FROM ALL THE PLAYERS
    KEN LAY
    JEFF SKILLING
    ANDY FASTOW
    LOU PAI
  • 5. ENRON TIMELINE
    1985: Enron formed
    Aug 2001 The beginning of the end at Enron: Jeff Skilling publicly announced he was quitting as CEO. For many people, both inside and outside Enron, that was when it became clear something was seriously wrong. Enron's stock fell 6 percent the next day, to $40.25. It would never close that high again.
    Oct 2001: Enron reports $638m third quarter loss and $1.2bn fall in shareholder equity Securities and Exchange Commission begins inquiry into firm.To Ken Lay and Jeff Skilling, Enron's CFO wasn't always the bad guy. Indeed, Andrew Fastow was a longtime Skilling protege, and Lay had always viewed him as indispensable. After Lay became CEO again, one of his early moves was to negotiate a lucrative extension of Fastow's contract, and Lay defended Fastow in an October 23 conference call, saying "I and the board of directors continue to have the highest faith and confidence in Andy." The next day, Fastow was gone, and Lay has recently claimed that the CFO's larcenous behavior sank the company
  • 6. Nov 2001: Enron shares sink to 10-year lows as buyout deal falls through and further losses are revealed at the firm
    Dec 2001: Enron files for Chapter 11 bankruptcy
    2002: Criminal investigation launched
  • 7. 2004: Skilling and Lay charged over Enron collapse Former finance chief. Among the 77 people on the list of potential witnesses for the prosecution, no one was closer to Jeff Skilling than Kenneth Duane Rice. Rice's role as CEO of Enron's broadband business, perhaps Enron's most brazen illusion, placed him onstage in the investigation of Enron. In May 2003, Rice was among seven broadband executives charged in a 218-count criminal indictment. For a year, Rice swore he'd done nothing wrong. Then, on July 30, 2004, Rice cut his deal. He later testified that it was at Skilling's urging that he lied about the state of Enron's broadband network. Andrew Fastow pleads guilty to criminal charges and agrees a 10-year jail term
    2005: For nearly two years after FBI agents first led Richard Causey, Enron's former chief accounting officer, into the federal courthouse in handcuffs, he asserted his innocence, claiming that there was nothing wrong with Enron's accounting. In doing so, he provided a valuable buffer for Lay and Skilling, who will insist they relied on his expertise. But three days after Christmas, Causey -- known at Enron as the "Pillsbury Doughboy"-- agreed to plead guilty to a single count of securities fraud, cooperate with government prosecutors, and serve up to seven years in prison.
    Jan 2006: Enron trial begins
  • 8.
  • 9. WHY BUSINESS ETHICS ???
    • Discussion on ethics in business is necessary because business can become unethical, and there are plenty of evidences as in today on unethical corporate practices.
    • 10.  Adam Smith opined that ‘People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices
  • Business ethics involves set of actions that make company more favorable to public and employees.
    It defines the code of conduct for employees
    It makes the company activities more legal and policies more social
  • 11. THE BIGGEST QUESTION ????
  • 12. IS IT THE MONEY OR IS IT THE PEOPLE
  • 13.
  • 14. SO WE BRING TO YOU
    THE ENRON SCANDAL
  • 15. ENRON Company Background
    • US energy company based in Houston Texas
    • 16. Employed approximately 22,000
    • 17. Declared bankrupt in late 2001
    • 18. Fraud was detected in the fact revealing
  • ENRON Scandal
    • The scandal was related to misleading the public about the true condition of the company
    • 19. The debts and losses of the company was hided and the revenues were shown increasing
  • ENRON Scandal
    • The chairman Mr. Ken Lay admitted that the company performance was not good at any point of time.
    • 20. The accounting firm Arthur Andersen was also involved in the whole process and they are also blocked from further business.
  • ENRON Scandal
    Enron shares hit high prices near $90
    After the fraud detection the share prices fell to $0.12
    Large number of investors lost their money comprising total loss of $11 bn
  • 21. ENRON Scandal- Descriptive Value
    • Changing scenario
    • 22. To raise its market stake in a consecutive manner.
    • 23. Showed only the profits to attract more public
    • 24. Wrong approach for a public company
  • How could Enron’s and George Bush’s Kenny Boy sell thousands of shares of his company’s once highflying stock just before it crashed, leaving employees with nothing?
     
  • 25.
  • 26. ENRON’s unethical behavior
    • The company’s act of not revealing the internal information to employees and public caused huge losses
    • 27. The hiding of documents related to some transactions and debts
  • ENRON’s unethical Approach
    • The Enron Company did adopt the utilitarian approach
    • 28. The hided and told lies to the public and employees.
    • 29. The higher management pressurized executives to discover new methods to of hiding information.
  • ENRON should have done
    • Company could have restructured its departments.
    • 30. The quality improvement strategies should have introduced.
    • 31. Quality improvements would have led to decrease in losses.
  • 32. ENRON should have done
    • The quality improvements decreases the errors in misacts of the company operation
    • 33. Enron should have performed better if it could have adopted dynamic strategy to overcome the changing environment and market.
  • QUESTION :1
    What are the systematic ,corporate an individual issues raised by this case ?
  • 34. QUESTION :2
    If not then what?
  • 35. QUESTION :3
    Who in your judgment , was morally responsible for the collapse of Enron?
  • 36. SO FROM ALL THE PLAYERS
    KEN LAY
    JEFF SKILLING
    ANDY FASTOW
    LOU PAI
  • 37. A MUST READ
  • 38. THANK YOU