Enron Corporation: The Real Scandal

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Most people usually work from rags to riches but, this is not the case of the Enron Scandal. In 1985 Ken Lay created Enron when he merged two companies in the Natural Gas industry. Moving into the early 90s, he aided in the selling of electricity at regular market prices. Following this initial action the US Congress approved the deregulation in the sale of natural gas. This caused Enron to be able to sell the energy at higher costs, increasing their profit. Once this plan was set Enron was on its way to the top in becoming the largest seller of natural gas in North America. By 1992, contracts earned $122 million, only the second largest contributor to the company’s net income. Seven years later in 1999, Enron became online accessible as a trading website allowing the company to more efficiently manage its contracts. In this case the entire company reversed the common saying “from rags to riches”, these people went “from riches to rags”. Beginning in the 1990s Enron’s stock increased 311% by the end of the year in 1998. In 1999 the increase was only 56% and another 87% in 2000. The end of the year in 2000, the final stock price was at $83.13 and capitalization exceeded $60 billion, nearly six times book value. Enron was then rated the most innovative large company in America in Fortune’s Most Admired Companies survey. From the film Enron: The Smartest Guys in the Room, it was only 24 days for the company to become completely bankrupt. There were several factors that caused the downfall of Enron. The company’s complex financial records were confusing to the shareholders and analysts. The complexity of the business model and unethical practices required that they use accounting limitations to misrepresent earned income and manipu... ... middle of paper ... ... cause for the company’s demise to Fastow. Lay was convicted of all 6 counts of securities fraud and subject to a max sentence of 45 years in prison. However, before sentencing Lay died. After a few simple mistakes and greedy hands this company manages to fall from riches to rags. Later on in life they may realize what they have done and make changes in their life. Never get too greedy or you too can fall flat, it doesn’t take much. Enron was a successful thriving company in our oil industry and they lost it all. Works Cited Enron: The Smartest Guys in the Room. Dir. Alex Gibney. Perf. Tim Belden John Beard. 2005. Netflix. Lashinsky, Adam. The Enron Scandal. 30 November 2001. 1 April 2014. Leaders, Print Edition. "The real scandal." 17 January 2002. The Economist. 1 April 2014. Silverstein, Ken. "Enron, Ethics and Today's Corporate Values." FORBES 14 May 2013.

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