ENRON (the

smartest guys in the room)

BY LEONARD PAKŠEC
„Mike, we are a green energy
company, but the green stands for
money.”

JEFFREY SKILLING, FORMER CEO OF ENRON

CORPORATION
 Once, 7th largest corporation in USA
•They revolutionized trading and energy market

•Far smarter than their competitors

•In reality – big scam filled with lies and political manipulation

•Billions of dollars stolen

•Thousands of lost jobs

•Dozens of convictions and one suicide

Kenneth Lay
Prominent figure in the deregulation of the energy sector

PhD graduate spent his time as a financial analyst in Pentagon

Founder of the company Enron

First scandal

2 oil traiders manipulated earnings and shifting money to fake accounts in Enron’s behalf

Lay acted shocked and not awared of their reckless gambling and theft
Jeffrey Skilling
Enron’s new CEO

Massive risk taker, reckless

He wanted to turn Enron from a gas supply company into a stock market for natural gas

He devised MTM accounting technique which allowed him to show future value of powerplant
currently built as today’s revenue in books
Massive bonuses handout
While losing milions in natural gas projects, Jeff Skilling convinced staff to put their earnings on
stocks (except he knew the profits are going in the oposite direction)
Power plant in India poured by billions of $ from Enron while Skilling knew India couldn’t afford
electricity
All that facts didn’t stop managers to book future profits and handing out big bonuses to themselves

Analysts fell under the spell and charisma of Skilling

Blockbuster deal

Enron soon started to trade bandwith to provide streaming services

Technology didn’t worked well enough back then

The deal fell trough (but it didn’t stoped Enron to wrote $ 53 billion of profit in their books)
Merging with Pacific Gas and
Electric company
Merging gave them acces to California electricity grid

Soon after Enron started to manipulate with prices on market by shutting down electricity in whole
area for a few hours
They know how to squezee every last dollar from the people of California
 Stocks
When Jeff Skilling sudenly, out of the blue, resigned in 2001, he said his employees to buy more
stocks when he sell all of his
For the thousands of people who held Enron stocks market was frozen while stock price was 32$ per
share, when it reopened, it was 9$ per share
Meanwhile, Enron executives have fire sale of all of their stocks

A few months after that, Enron faced bankruptcy and many executives were found guilty of wire
fraud and faced prison sentence

source: movie by Alex Gibney: Enron The Smartest Guys in the Room
Conlusion

Unethical acts of executives took away whole corporation to the ground, reaping

billions of dollars to themselves. Enormous charisma and burning desire to

pursue a personal goal with unrelenting and devouring zeal, helped them achive

that goal, but in the end, all of that became the biggest scam in America’s history.