Enron Scandal Summary- the crooked e: the unshredded truth about Enron. Summary of Enron Scandal and Enron Case Study. Enron Scandal Summary. Story of Enron Fraud.
Enron Scandal Summary
Enron Corporation is an energy company based in Houston, Texas. However, it is one of the most devious economic scandals. The company was also a commodities and services organization that served much of the country.
Questionable accounting techniques were brought to light, and many suspected that the stench of fraud was lingering around the business. During the profitable years, Enron's stock price was above $90 per share. However, the scandal that eventually was revealed toppled the business in an instant by Bottiglieri, Reville, and Grunewald. The stock closed in 2001 at an ultimate low of 26 cents a share—furthermore, Enron's inevitable declaration for bankruptcy.
Kenneth Lay, Founder of Enron
Kenneth Lay, the founder of Enron, promoted the importance of high stock prices above all else. He pushed employees to focus on rising rates of return by trading assets and borrowing more money. An asset-free balance sheet meant that new resources could come in and trick the public into thinking that the company was hugely successful. Lay essentially began the craze for high earnings, an obsession that cost his company its life. Ultimately, it was Lay's role that set in motion the collapse of Enron.
Andy Fastow Enron's CFO
Andy Fastow, Enron's CFO, was a master at manipulating liabilities. He used a technique common among energy corporations that used unique purpose entities to relocate liability away from Enron. He made it so that the stock price per share would continually increase, allowing it to continually hold a high investment rating. Fastow was the reason that Enron got away with the scandal for so long. He enabled the company to hide behind false information and comfortably take advantage of the system.
Enron Scandal
Enron, as a company, completely fell apart after the collapse. It was forced to renounce earnings with multiple partnerships such as Chewco Investments and JEDI. The corporation was then required to recover profits back to 1997, which amounted to just $586 million, just 20% of the estimated earnings. The stock prices dropped to mere pennies and lost all consumer and financial buoyancy. Enron declared bankruptcy shortly after
Enron's shareholders did not benefit from the greed of the executives. Those that had their pension funds financed in the company lost almost everything. Consequently, the SEC and Congress worked swiftly to begin immediate restructuring to reduce losses like those experienced in the future. A $40 billion lawsuit followed the collapse, demanding compensation for the shareholders' worthless stock. The collapse destroyed more than $2 billion in pension plans.
The Enron workers have suffered immensely and, in most cases, lost all that McLean and Elkind, "The Guiltiest," had put in the company. One employee, Charles Prestwood, lost $1.3 million in the Enron collapse. Money entrusted in the company in retirement savings or investments disbanded overnight. The SEC announced after the crash that they would try to regain as much of the missing money as they might through their justice system. Enron employees have fired abruptly without issuing any notice. Employees also need to vacate the company within 30 minutes. So, the company should be aware of the economic situation and the factors of the company's downfall. We must always monitor and speed constantly.
Enron Scandal Analysis
So, in my opinion, the company should be aware of the economic situation and the factors of the company's downfall. We must always monitor and speed constantly, instead of the company's Enron wasting the struggle to make a loan to support Enron's business. Every company should follow a business management strategy such as TQM, Six Sigma, and Deming cycle.
The company should try to cover back the share that employees have invested in the company. So no company still bears debt in terms of banks and between employees but often if share, if the company loses the person involved indirectly or invests with the share also loses. This is because if the employee wants to claim rights, the company has nothing. They want to sue the company is under bankruptcy, so no point. From this, the company must take care of management at least issue a notice saying the company can't cope for the next month, so employees can take time from the issuance of the notice to find a job.
Monitoring Operation
Besides that, organizations should monitor everything closely. If an organization does not follow, it has the ability to abuse the system and do whatever it wants. I believe that due to the Enron collapse, people will pay more attention to how corporations operate even if they cannot directly control the ethics of the company. At least, in this case, there will be significant pressure to do what's right.
Moral Practice
Last but not least, that our group can conclude was organizations can be as ethical or unethical as they want. They will treat their employees, shareholders, partners, and creditors however they want. Sometimes corporations will act in their best short-term interest, but there's also the option to behave properly and look at the long-term goals. Risk tolerance can be a good thing, but it is up to the corporation to decide how much risk they are going to take and at what cost they are going to take risks. We can do our best to regulate and criticize, but in the end, it's their call. We can only hope they do the right things.
Enron Scandal Movie Summary
Crooked e the unshredded truth- Enron scandal summary
The Crooked E: The Unshredded Truth about Enron Scandal is a television movie broadcasted by CBS TV, an American television broadcasting company, in January 2003. Therefore, the movie depicted the real situation, condition, and emotion of those who suffered from this Enron scandal. It shows how employees, shareholders, and partners suffered from the fall of Enron. In addition, this movie displays how a large number of employees lost their life savings.
Based on the Crooked E TV movie plot, we have outlined three important topics: Business Ethics, Corporate Governance, and Corporate Branding. These three topics are related very closely to the movie story.
Business Ethics
Firstly, business ethics is the extension of any organization's moral philosophy and principles. Business ethics is a guiding principle; it helps the company increase productivity and run smoothly based on honesty and integrity. Based on both the case study on Enron and the movie story, it is evident that the higher authority of the Enron Corporation did not follow the business ethics properly. They engaged in corruption intentionally, which is against business ethics. So, the Enron Corporation collapsed because of not practicing business ethics. "Ethics and integrity are at the core of sustainable long term success," says Richard Rudden, managing partner at Target Rock Advisors in New York State.
Corporate Governance
Secondly, corporate governance is an inevitable system of rules, processes, and practices by which a company is established and regulated (Moore & Petrin 2017). A solid corporate governance framework in a company can protect Partners, employees, stakeholders and maintaining investor confidence. The Enron Corporation failed to strengthen corporate governance; therefore, it got bankruptcy. Due to not maintaining and practicing corporate governance in the Enron corporation, many employees, shareholders, and partners suffered from the fall of Enron. Additionally, the audit officer was also indulged in corruption that represents the company's lack of practicing corporate governance. Therefore, the lack of corporate governance in the Enron Company is another vital cause of falling.
Corporate Branding
Finally, corporate Branding denotes the practice of marketing the brand name of a corporate entity instead of specific products or services. Corporate Branding became a much-talked issue when Enron became bankrupt. The higher authority paid huge attention to corporate Branding to attract stakeholders and employees for investing more money in the company. In 2000, Enron's share skyrocketed to an all-time high of $90.56 because of tricky corporate Branding. They managed to conceal their mountains of debt and losses. Enron became a very famous company in the US within a short time because of proper and tricky corporate Branding. They exaggerate only the positive aspect of the company and hide negative features during marketing. Fortune magazine listed Enron as one of the "100 best companies to work for in America".
Lessons Learned From Enron Scandal
Based on the Enron Scandal Movie Review The Crooked E: The Unshredded Truth, we have outlined three key takeaways from this movie, for example, be careful of starting a new job, never invest all money at a business and finally, investigate the company before investing money. We will use it in our life hereafter and also pass it on to your children. These key takeaways are essential for building a secure and successful career. Around 4,500 employees lost their job because of the Enron scandal; therefore, I will be more conscious whenever starting a new job and suggest others investigate more about the company before starting the job.
Key Takeaways From Enron Scandal Movie Summary
Firstly, we have to be more careful when investing our all money in a business. The finding I got from this movie is to invest half of our money and keep the rest of the money to recover if we lost money somehow. Many young investors sank because they invested all of the money that they accumulated.
Finally, we have to have a heuristic mentality when study about a company for investing. It is an indispensable process to study background information and map out the future condition of the company. Many young investors invested their capital, but the company dramatically collapsed within a short time. There is no alternative, but we have to be more conscious before starting a new business or job.