1. ENRON

2. 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.

3. 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

4. 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

5. 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.

6. 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