1. Public outrage grows, governance credibility falls
FIGURE 9.1
GOVERNANCE REFORM TIMELINE
Public outrage grows, governance credibility falls
Enron
Bankruptcy
December 2, 2001
WorldCom Restatement
June 25, 2002;
Bankruptcy
July 21, 2002
SEC
Regulations
Stock Exchange
Guidance
Arthur Andersen
Court Case
Winter/Spring 2002
Sarbanes-Oxley Act
Signed
July 30, 2002

2. Enron Corp. (last price N/A)
FIGURE 9.2
ENRON STOCK CHART, WEEKLY PRICES,
Enron Corp. (last price N/A)
$ 90.00
$ 80.00
$ 70.00
$ 60.00
$ 50.00
$ 40.00
$ 30.00
$ 20.00
$ 10.00 $
US Dollars
Reprinted courtesy of StatPro Canada, Inc.

3. TABLE 9.2 PAYMENTS TO FASTOW & HELPERS INVESTMENT RETURN, IN MILLIONS
OTHER, IN MILLIONS
A. Fastow
$25,000
$ 4.5 in 2 mo.
$30 + stock options
M. Kopper
125,000
10.0 incl. Dodson
$2 in fees
B. Glisan
5,800
1.0
K. Mordaunt

4. TABLE 9.3 ENRON WHISTLE-BLOWERS BLEW TO ACTION SUBSEQUENTLY
Cliff Baxter, Vice Chair
Lay
None
Exercised $32 million in stock options, just agreed to testify to Congress, found shot dead in his car–an apparent suicide–on Jan. 25, 2002
McMahon, Treasurer
Fastow
Reassigned, later returned as CEO
Kaminski, Risk Mgr.
Continued
Sherron Watkins
Discussed with Skilling and asked Vinson & Elkins to review

5. FIGURE 9.4 ENRON’S GOVERNANCE & CONTROL STRUCTURE WAS SHORT-CIRCUITED
BOARD
Outside Law Firm
Ken Lay: Chair; Co-chair Baxter
Committees: Audit and Compliance
Compensation, Finance,
Nominating
Financial Reports
SPEs
Internal Audit … AA
MANAGEMENT
CEO: Lay, Skilling
CFO: Fastow
CAO: Causey
CRO: Buy
Others: Kopper, McMahon, Glisan
Watkins, Kaminsky
Whistle-blowers
Company Policies
Code of Conduct
LEGEND
Missing Guidance
AUDITOR
Arthur Andersen
Missing
Compliance
Consultant: Arthur Andersen
Suspended Guidance

6. TABLE 9.4 ENRON’S ACCOMPLICE BANKS’ LAWSUIT SETTLEMENTS $ COMMENT
Merrill Lynch
80m
March 2003 Fine imposed by the SEC. Four of the Bank’s executives were found guilty of fraud and conspiracy, facing sentences of up to 15 years in prison (Daniel Bayly, Robert Furst, William Fuhs,and James Brown).
JP Morgan Chase
2.2bn
135m
August First Enron-related US Bank settlement. The bank denied wrongdoing.
August Fine imposed by the SEC. JP Morgan’s Q2/Q3 profits were $1.83bn.
Citigroup
1.7bn
120m
June Citigroup did not admit liability, and said money already set aside for legal costs would cover the payment.
August Fine imposed by the SEC. Citigroup’s Q2/Q3 profits were $4.3bn.
Canadian Imperial Bank of Commerce
2.8bn
June More than annual profit yr 2005.
December Fine imposed by the SEC. Two CIBC executives also will pay fines totaling $600,000.
Toronto Dominion Bank
130m
August 2005
Royal Bank of Canada
25m
Royal Bank of Scotland
42m
Sources: SEC files, newspaper articles and Enron’s website at for press releases on Megaclaims settlements.

7. TABLE 9.5 ENRON KEY EXECUTIVE INDICTMENTS INDICTED BY FOR
PLEA/ COOPERATE 
RESULT
Ken Lay, Chair, Chair and CEO
Jul 2004, 2 trials:
1 jury, 1 judge
Conspiracy, fraud & false statements
Not guilty
Guilty in both trials, but died
before sentencing, so
verdicts vacated
Jeffrey Skilling, CEO
Feb 2004
Conspiracy, fraud, false statements, insider trading
24 yr, 4 month sentence
Restitution $45 million
Andrew Fastow, CFO
Jan 2004
Securities fraud
Plea agreement (guilty) 
10 yr sentence, later reduced to 6 yrs, forfeit $23.8 mil
Lea Fastow, Assistant Treasurer
May 2004
Tax fraud
1yr sentence
Richard Causey, CAO
Dec 2005
7yr sentence Forfeit $1.25 million
Michael Kopper
Aug 2002
Fraud and money laundering
37 month sentence
Forfeit $12 million
Mark Koenig Investor Relations
Aug 2004
Plea agreement (guilty) 
18 month sentence Forfeit $1.49 million
Ben Glisan, Treasurer
Dec 2002 Sep 2003
Fraud Fraud
Denied wrongdoing,
later 
5yr sentence,  later brought
favors, forfeit $625,000.
Kenneth Rice, CEO Broadband Services
Apr 2005
Plea agreement (guilty)
10yr sentence Forfeit $29.4 million
Kevin Hannon
Sep 2005
Guilty
5yr sentence Forfeit $250,000
Timothy Despain Assistant Treasurer
Apr 2004
5yr sentence, released on $100,000 bail
Enron Board of Directors (18 members)
Jan 2005
Breach of Fiduciary Duty
Settlement $168 million; $155 million covered by insurance
Source: SEC Files, newspaper articles, see also
= Cooperates with prosecutors