Lessons Learned From Enron?

The Enron scandal is a tale of massive fraud that will never be fully revealed. But here’s what we do know: Enron achieved great success in the energy field, even if it was under dubious circumstances, and that success inspired top Enron executives such as Jeff Skilling to expand Enron’s operations into other ventures. The ventures didn’t pay off as they had hoped, and Enron started to lose money. Skilling, and other execs such as Andrew Fastow, schemed to create bogus partnerships where Enron’s growing losses could be hidden. With the help of accounting giant Arthur Anderson, Enron moved their debt (on paper) to these partnerships. It made their bottom line look very nice. Eventually, people started to ask questions, and when top executives cashed out their Enron stock and left the company, it all started to unravel. The courts pierced the corporate veil. Domination by Skilling and his minions by artificially pumping up the stock price and benefiting personally, along with the looting manifested as having the partnerships assume Enron debt to the detriment of the “partnerships” and to the benefit-and the stock price of Enron. Skilling and Fastow were eventually convicted of their crimes. Chief Ken “Kenny Boy” Lay, died before he could be convicted-and linked back to the Bush Administration. Hmmm. We’ll never get the full story now.

Had Sarbanes-Oxley been in effect at the time, Enron would have had to find another way to hide its debt. Although companies are now required to disclose material off –balance sheet transactions, still, with the help of Arthur Anderson wannabees the fraud could still continue. It would force these corporate criminals to jump through a few more hoops. Although Sarbanes-Oxley would ostesibly help, it was really the complexity of the fraud that allowed Enron to carry on so long. To this day, people are still trying to decipher the books fully. When you have testosterone-fueled ambition like Jeff Skilling had, laws are just made to be broken.

So in the end, did Sarbanes-Oxley help? Does it even apply to the current mess? Hank Paulsen is probably thinking, “[o]versight, schmoversight. Give me the money or I’ll crush this country like an empty beer can. You have one week.”

The World of rjjrdq

This entry was posted in Accounting, corruption, Enron, Finance, Globalization, Greed, Money, Politics and tagged , , , , , , , , , , , , . Bookmark the permalink.

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