ENRON_THE SMARTEST GUYS IN THE ROOM

Enron Collapse

United States of America is the largest international economy in the world and it is leading
the financial trades in the world with GDP more than 19.4 trillion dollar.
In this huge economical giant there is many interesting and weird stories happened, some of
these stories could called financial scandals and some of them effected the USA financial
system and the world financial system.
One of the largest famous scandals in US I know is “Ponzi scheme” which ran by “Bernard
Madoff” in 2008 and he got a sentence for the maximum sentence in federal prison for 150
years.

 Bernard Madoff

Another interesting and famous story is “Enron Scandal”, Enron scandal happened in 2001.
There’s many of movies and documentaries made for Enron Story, one of the popular
documentary about Enron story I watched last week is called “Enron – the smartest guys in
the room”.
In the documentary, you can watch many real recorded
videos about the story, interviews, and the judgment
sessions. In the documentary you will know the full story
from beginning as I will conduct a short brief about it.
In Early 80’s Enron was an American energy and services
company focused in natural gas initially and it is founded by
Kenneth Lay by a merge with another company. Later on,
Enron was increasing in many businesses and it was
increasing also in the “wall streets trade market” which is
the huge financial markets and the companies that trade
publicly on exchanges throughout the U.S.
In Early 2000’s Enron was one of the top 10 companies in US,
its stock price reached 90$ in 2001 and after only less than 5
 Enron – The Smartest
months, the stock price was suddenly 0.2$ ,and the company
Guys in The Room
was bankruptcy declared and caused a layoffs for more than
20,000 employees in Enron Corporations only. Also, many
huge companies related and not related to Enron were bankruptcy decelerated too due to
and after Enron bankruptcy causing a collapse called by “Enron Collapse”.
The Key people of this collapse were “Kenneth Lay” who is the founder and the chairman of
Enron Co., “Jeffrey Skilling” who was the president and the CEO of Enron and “Andrew
Fastow” who was the chief financial officer CFO of Enron Co.

 Kenneth Lay  Jeffrey Skilling  Andrew Fastow

Jeffrey Skilling “Jeff” and Andrew Fastow “Andy” were the idea’s owner of the huge
financial trick, which was about using an accounting system showing the profits only and
hiding the loses. Also, they were recorded unreal and expected income and profit as real
incomes and profit in the financial papers of the corporation. Surly, this caused stock price
inflation and overvaluation of Enron’s stock price and made the company one of the largest
company in US with recorded revenues more than 100 billion dollars!

In fact, the corporation in that time was not in the good situation, it was losing but the
profiting was the only thing you can see in the financial papers and in the announcements.
Actually, Enron was recording some of loses but they were recorded in fake companies or
and other companies financial papers under Enron. One of these largest companies was
“LJM” which was founded by Enron with help of the “Andy”.

Enron was also an environment of the financial corruption corporation, Enron key people
were embezzling and pay bribes. For example, “Andy” embezzled 45 million dollar from
“LJM”. Also, Enron bribed one of the largest financial and accounting companies which was
“Arthur Anderson Co.”, Anderson was the audit accounting company revising and get the
financial approvals for the Enron’s financial papers for more than 15 years. In the end,
Anderson convicted of obstruction of justice for shredding documents related to its audit
of Enron and bankruptcies after Enrons collapse.

Enron was popular and genius in marketing and they entered the political society by
supporting the major and different US election campaign with Bill Clinton Bush father and
son, and they were expanding the business in different sectors and business such as energy,
electricity and communications. Enron was expanding the businesses internationally too,
one of the huge international projects for Enron was the electricity station in India which
was extremely losing and stalled project, but in the financial paper surely it wasn’t.
Suddenly in early 2001, Enron’s key people withdrew and they sold their shares. In
meanwhile, they were mentioning that Enron is great and asking people to invest more in
Enron. In that time, people started to be little bit curious more and more about Enron and
it’s profitability. After that, an accounting journalist women wrote about Enron stock price
overvalued and she mentioned that many times in many conferences. Later on, people
started to knows the reality of Enron and suddenly Enron decelerated its bankruptcy to
causing the (Enron Collapse) in 2001.

As we mentioned above, during the court hearing, “Anderson Co.” convicted of obstruction
of justice for shredding documents related to its audit of Enron.
During the court hearing, Kenneth Lay had a heart attack and died before he heard his
judgment sentence. “Andy’ he got 10 years, and “Jeff” got an 24 years and bailed after 12
years in prison.