What is ENRON?
ENRON was a multinational energy corporation that was founded in Omaha, Nebraska in 1985. Regardless of ENRON’s vast successes within the natural gas industry - within which it was considered to be one of the foremost natural gas conglomerate companies, the mention of the name ENRON in current times is commonly associated with a financial scandal involving the company. This scandal, also known as the ‘ENRON Scandal’ gained a vast amount of media coverage on both domestic and international levels; in addition, the ENRON scandal resulted in the bankruptcy of the company, the criminal prosecution of a number of executives, and an loss of upwards of $2 billion with regard to investors, employees, and clients.
The Beginning of ENRON
Subsequent to the merging of 2 large natural gas companies located within the Nebraska – Houston Natural Gas and InterNorth, Inc. – ENRON was formed and quickly assumed its authority at the forefront of the natural gas industry; although ENRON was founded in Nebraska, it quickly relocated to Houston, Texas where it established its headquarters. Subsequent to the merger, Kenneth Lay - the acting CEO of the Houston Natural Gas company – was appointed as the CEO (Chief Operations Officer) of the ENRON Corporation; Jeffery Skilling was appointed as CEO subsequent to Lay’s retirement.
The Crimes of ENRON
The following are only a number of the crimes and fraudulent activity undertaken by the exectutives of the ENRON Corporation:
What is Deregulation?
ENRON’s criminal activity is considered to have begun upon the application for government deregulation with regard to its commercial and financial activity. While the government will assume regulatory power with regard to certain commercial and business endeavors, ‘deregulated’ businesses are not subject to government mandating and oversight; as a result, the executives of ENRON were able to misrepresent their respective earnings reports and stock activity in a fraudulent manner – using loopholes found in the limited liabilities undertaken by ENRON, the executives misrepresented their earnings reports
What is Misrepresentation?
Many historians and economists maintain that he ENRON executives took advantage of investors; both current investors, as well as potential investors. The current investors of the ENRON Corporation were deceived into the belief that their respective investments were rendering massive amounts of financial gain as a result of the figures illustrated by the fraudulent earnings reports; potential investors were eager to share in the perceived prosperity of the ENRON Corporation, which promulgated even additional investors.
What is Embezzlement?
Subsequent to the influx of incoming funds resulting from increased investment activity, the executives of ENRON illegally obtained these funds in lieu of funneling them back into their rightful place in the corporation’s budget; the misappropriation of these funds not only result in a loss of billions of dollars with regard to investors, but led to the bankruptcy of the ENRON Corporation.
The End of ENRON
In 2001, the failure to provide for any evidence of the earnings fraudulently claimed by the ENRON Corporation, the Securities and Exchange Committee (SEC) audited ENRON and uncovered the fraudulent activity; this resulted in the loss of billions of dollars and the prosecution of a number of ENRON executives.