How Did Such A Powerful Company Fall From Grace And Self-Imploded To Bankruptcy?

Submitted By hawkins29299
Words: 673
Pages: 3
Open Document
CRJ 492 White Collar Crime
Dr. Gavin Lee
Fall 2013
Colin Hawkins

Scandal of Enron

Enron was the largest energy trader in the world, the largest owner of natural gas pipelines in the United States and leaders of the energy deregulation (Chatterjee,2001). Enron was one of the most powerful and wealthy companies in the world towards the end of the companies legacy (Chatterjee,2001).How did such a powerful company fall from grace and self-imploded to bankruptcy? The start of Enron all came together with the merger of two companies in 1985(CBCnews). The two companies that took part in the merger were Houston Natural Gas and Omaha-based InterNorth . The merger of these companies was the very beginning of Enron Corp. and the start of a tragic-legacy. The former chief executive officer of Houston Natural Gas was Kenneth Lay the founder of Enron Corp. (CBCNEWS). In 1986, Kenneth Lay gained the position of Chairman and CEO of Enron Corp (Chatterjee,2001). Over the years, Kenneth Lay invested millions into lobbying even financing political campaigns for privatize and deregulation the energy industry (Chatterjee,2001). In 1989, Enron started to trade natural gas commodities in order to help customers by selling them for long-term prices (Chatterjee,2001). Kenneth Lay hired Jeffery Skilling in 1990 to lead Enron efforts of dealing with trading commodities in a deregulated market (USAtoday,2006). Enron purchased gas supplies from the producers and set-up the delivery of the services. Then Enron took a percent off every deal made. Resulting in Enron becoming one of the largest natural gas dealers in North America and the United Kingdom (Chatterjee, 2001). The success in the natural gas industry made the company try their luck in different markets. Enron believed it could apply those similar tactics to the different markets they picked to explore. The growth of Enron was lead by Jeffrey Skilling a former energy consultant, who turned Enron into a powerhouse on trading unregulated energy (Chatterjee,2001). The company started betting on future profit they stood to make witch in some cases weren’t made (Chatterjee,2001). In becoming a powerhouse it only raised the price and inflated stock prices for Enron .In 1997, Jeffrey Skilling was named President and COO of Enron (USAtoday,2006). In 1990, one of the first people hired by Skilling at Enron was Andrew Fastow (USAtoday, 2006). During, Jeffrey Skilling’s run as President he named Andrew Fastow as Chief Financial officer in 1998 (USAtoday,2006).