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Enron Scandal Essay

970 words - 4 pages


MBAC422: Business & Society
Case 2



Prof. Anil K Bhat
Dr. Sarvesh Satija
Management Department



Enron Corporation was an American energy, commodities, and Services Company based in
Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately
20,000 staff and was one of the world's leading electricity, natural gas, communications, and
pulp and paper companies, with claimed revenues of nearly $101 billion in 2000. Fortune named
Enron ...view middle of the document...

Chief Financial Officer Andrew
Fastow and other executives not only misled Enron's board of directors and audit committee on
high-risk accounting practices, but also pressured Andersen to ignore the issues.

What Went Wrong at Enron?
Ken Lay was different. A hands-off manager and a business visionary, he saw opportunity in the
rapid deregulation of energy markets in the United States and around the world. He attracted
subordinates who wanted to seize these opportunities. Of these, the two most influential were
Rebecca Mark and Jeff Skilling.
Mark was a strikingly beautiful and charming woman. Her business wardrobe included fur coats
and stiletto high heels. Aggressive and accustomed to getting her way, her nicknames came to
include "Mark the Shark" and "Hell in High Heels." Like Lay and Kinder, Mark had come to
Enron from Houston Natural Gas. At Enron during the late 1980s, she worked in the electric
power division, learning how to negotiate international power generation projects in a market
that was just beginning to attract investors. One important deal was a gas-fired electricity
generating project at Teesside in Northern England. Lay was impressed with Mark's style and
facilitated her advancement in the firm.


Enron managed to hide millions in dollars in debt and losses through unlawful accounting
practices. They hide these losses under their many subsidiaries, often in foreign countries. In
event of the fraud being exposed, Enron’s stock crashed but few of the management members
managed to bail themselves out by selling the stock when it was still at a high. The investors and
employees were left high and dry to face the loss of their investment, pension and retirement
amounts. There are many criminal investigations and cases registered for Enron executives.
These executives have been known to receive hefty bonuses just before the collapse of Enron.
Other accounting scandals like WorldCom and Xerox were brought to light further reducing

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