Enron Scandal

Presented By:
Umar Amin
Arshid Yaseen
Shubh Amrit Paul Kaur Hundal
 About Enron
 The Enron Corporation Was Created out Of The Merger Of
Two Major Pipeline Companies in 1985.

 Provided natural Gas, Electricity And Communications

Services.

 In 2000 Enron’s Annual Revenue reached $100 Billion And

Was Ranked 6th largest Energy Co. In The World

 From 1998 To 2000 Alone,Enron’s Revenues Grew From

About $31 Billion To More Than $100 Billion, Making It 7th
Largest Co. Of The Fortune 500
 Key People Involved In The Scandal

Kenneth Lay  Chairman

Jeffrey Skilling  Chief Executive Officer

Andrew Fastow  Chief Financial Officer

 About The Scandal
 Enron's Case Was Clear Picture of High Level Accounting Fraud
Through Which The Company’s Top Level Officials Profited Personally
Through Illegal Transfer Of Funds

 In 2001 Enron Filed For Bankruptcy

 It Collapsed Under A Mountain Of Debt Which Had Been Concealed

Through A Complex Scheme Of “Off-Balance Sheet Partnerships”

 Enron Used ”Special Purpose Entities”(SPE’s),To Conceal Losses

 Enron Had Established The SPE’s To Move Assets And Debt Off Its
Balance Sheet & To Increase Cash Flow by Showing That Funds
Were Flowing Through Its books When It Sold Assets.
 Enron’s Partners In Scandal
 Vinson & Elkins

Legal Firm Which Supported All Of Enron’s

Illegal Activities

 Merrill Lynch

Investment Banking Firm

 Arthur Anderson LLP

Audit Firm Which Helped Enron In All Its Accounting

Frauds
The Impact/Effect Of Enron’s Scandal
 Caused Tens Of Billions Of Dollars Of Investor Losses

 Collapse Of Electricity Trading Markets

 Global Loss Of Confidence In Corporate Integrity

 4000 Employees Struggling To Find Jobs

 1 Senior Enron Executive Committed Suicide

 Many Retirees Were Forced To Return To Work In A

Bleak Job Market As Their Enron-Heavy Retirement
Portfolios Were Wiped Out
 Consequences
 Enron Faces Many Law Actions

 Arthur Anderson Faces Some 40 Share Holder Law Suits For

Damages More Than $32 Billion

 In July 2003 Enron Announced Its Intention To Restructure And Plan

To Play Off Its Creditors

 Most Creditors Would Receive b/w 14.4 cents & 18.3 Cents For Each
Dollar They Owed

 The Most Important Result Enron’s Scandal Was The Passage Of

The Sarbanes-Oxyley Act Of 2002

 This Act Prescribes The Internal Control Requirements For Publicly

Traded Companies
Thank You
For Your Patience