|
Enron was founded in 1985 by Kenneth Lay, when the two gas companies Houston Natural Gas and InterNorth merged. It was the first company to build a nationwide national gas pipe system. By the 1990s, Enron moved into trading business, beginning with natural gas and moved then into electricity. It became the largest trader of electricity and according to Fortune 500 it was the 7th greatest company in 2001.
Enron's stock exchange value had grown more than $ 50 Billion from 1996 to 2001, and in 20 quarters in a row it had reported increasing profits. It had been awarded to the \"most innovative company\" six times in a row by the economic magazine \"Fortune\".
Enron also tells the story of the largest bankruptcy in U.S. history that has cost thousands of employees their jobs and their retirement.
The basic idea of Skilling (COO and president from 1997 thru 2001, then CEO for about 6 months) was the \"Asset light\"-company. Assets, which were not absolutely necessary for the business, were divided on several limited-liability companies.
Nobody really understood the financial structure of Enron and more and more it became clear that Enron's trades did not bring as much money as reported.
The scandal begins to become obvious in 2001, when Enron's managers sell big parts of their stocks. Skilling earns $ 17.5 Million. In the first half of the year, the stock loses 39% of its value.
In August, Skilling suddenly steps back from his position as CEO for \"personal reasons\". Later people argued that he knew what would happen and saved himself when the situation became hot. Enron's founder, Ken Lay becomes the new CEO.
On October 16th, for the third quarter of the year, a loss of $ 618 million is reported and by now the company begins its way into bankruptcy. On December 2nd, the company declares bankruptcy.
Enron's connections to the Bush-government become known. President Bush received more than $290,000 in contributions from Kenneth Lay. Enron and its executives contributed $1.7 million to both Democrats and Republicans in the 2000 election alone, according to the Center for Responsive Politics. As Bush's number 1 corporate patron, Enron had a big reach into his administration. The result of this access was a GOP energy bill with 17 policies for Enron, a predominant role by Enron executives in selecting the nation\'s top energy regulator that would oversee Enron, and a GOP tax bill providing Enron a $254 million refund. Over 50 high-level Bush administration officials have had meaningful ties to the now defunct energy company. And according to financial disclosure forms, at least 40 administration officials owned Enron stock.
The company Andersen, which was responsible for Enron's finances, confessed that it handled some of the company's debt money wrong and that is also destroyed some important files.
Another issue is, that Enron's managers told their employees to invest their retirement money in Enron stocks. They were told that in the next 10 years, the value would increase more than 800%.
|
