Assignment # 9

The Enron Scandal
In the year 2001, U.S. history’s biggest bankruptcy led to the demise of former American energy corporate company called Enron based in Houston, Texas. The ironic part is the “Fortune” magazine named Enron ‘America’s Most Innovative Company’ for six consecutive years prior to their downward spiral from 1996 through 2001. Known as one of the world’s leading electricity, natural gas, pulp, paper and communications company, Enron claimed to have a revenue of $111 billion in 2000, the year before its bankruptcy. “In just 15 years, Enron grew from nowhere to be America's seventh largest company, employing 21,000 staff in more than 40 countries,” says BBC news.
The irony became not too ironic when Enron was revealed for accounting fraud and the leading accounting firm behind the scandal was Arthur Andersen. Books had been audited Andersen during the collapse of Enron which cost investors over $60 billion dollars according to “TIME” magazine. Before being subpoenaed, workers at the firm illegally destroyed a large, yet unknown amount of documents relating to the Enron company
On January 9, 2002, The United States Department of Justice began a criminal investigation of Enron. After being exposed in corporate fraud, it was found that profits were inflated and debts were not reported in the company’s financial statements. According to “BBC News” The congressional hearing began on January 24, 2002 which gunned for three key players: Andrew Fastow, (Enron’s former chief financial officer) Kenneth Lay (Enron’s former chief executive and chairman since 1986), and David Duncan (Enron’s chief auditor at Andersen). Congressional investigators told “TIME” magazine that David Duncan and other directed workers shredded important documents when it was his job to audit Enron’s accounts.
Before the scandal, Enron shares were considered a blue chip stock and were worth $90.00, but dropped to .30 cents after the scandal was revealed. President Bush was also good friends with Kenneth Lay who donated $2 million dollars to his campaigns. Currently, Enron still exists without any assets as a shell corporation.