ENRON

ENRON Kenneth LAY, was chairman & CEO of Enron In 2006 convicted by a jury of conspiracy & multiple counts of fraud Enron : -founded in the 1980s; -became a dominant player in the field of energy trading -became America’s 7th biggest company -was dynamic, innovative & profitable -in 1998 value of Enron stock increased 40 percent -in 1999 it shot up 58 percent & -in 2000 went up 89 percent.

ENRON -in 2000 Fortune magazine voted it “the most innovative company of the year” -in December 2001 it was forced to declare bankruptcy Results : -its crash cost the retirement accounts of its employees=billions of dollars & they lost their jobs -outside investors lost even more Reasons: -it made its financial records & accounts as opaque as possible -off-balance-sheet special purpose entities were created = about 9000 of them

ENRON Reasons: -board of directors overlooked these & other dubious accounting practices -its financial auditors , Arthur Andersen –longtime outside auditing firm- & Vinson & Elkins – law firm-, put together & signed off various dubious financial deals = made large profits for themselves -Arthur Andersen was responsible to make sure that the company’s public records reflected financial reality Results : -Arthur Andersen, 89 year old accounting firm, convicted of obstructing justice & in 2005 it had been driven out of business

ENRON Results :-its fall threaten the credibility of Wall Street’s analysts , analysts who are compensated according to their ability to bring in & support investment banking deals, conflicts of interest Reasons: -212 out of 248 members of Congress* had received money from Enron & its accounting firm = both companies enjoyed extensive political connections *ABD Kongresi, iki meclisli bir yasama organıdır: Senato (The Senate) ve Temsilciler Meclisi (The House of Representatives). Senatonun, ABD'nin 50 eyaletinin her birinden seçilen 2 (eşit sayıda) senatörden oluşan 100 üyesi bulunur. ABD Senatosu'nun üçte biri her 2 yılda bir yapılan seçimlerle yenilenir. Her senatörün bir sonraki seçime kadar olan görev süresi 6 yıldır.  

Boards of directors :oversee activities of managers & ensure best interest of corp. are being served. Auditors & accountants: conduct independent apprisel & testify to integrity of financial reports. Financial Analysts : to provide truthful advice to investors. Government Regulators: to prevent fraud & conflicts of interest, promote responsible corporate Governance