Shivani Sahai Alok Ranjan

Anurag ShuklaMayank Saxena

Indu Shekhar Karishma Sabhani

Presentation By:

Former Type : Public Company Industry : Energy

Founded : Omaha, Nebraska (1985) Founder(s) : Kenneth Lay Defunct December 2, 2001 Headquarters Houston , United States Key People Kenneth Lay, Founder,chairman And CEO

Jeffrey Skilling,former President, CEO And COO And Andrew Fastow, Former CFO

Revenue $ 101 Billion (2000) Employees 22,000 (2000) {Approx.}

Overview

About Enron One Of The World's Leading Supplier Of Electricity, Natural Gas, Communications, And Pulp And Paper .Development Of Power Plants ,Pipelines .CEO , CFO And Chairman Transformed EnronDramatic Growth Fortune Named Enron "America's Most Innovative Company" For Six Consecutive Years

1985 : Houston Natural Gas Merges With Omaha Based Internorth Forming Enron Corporation.

2000 : Annual Revenue Touched $100 Billion And Acknowledged As The Sixth Largest Energy Company .

August 2001: The CEO Resigns And Lay Takes Over As The New CEO

Some Important Dates Of The Scandal

ENRON’S Misleading ACCOUNTS Bankruptcy Filing Came After Series Of

Revelations' That Giant Energy Trader Had Been Using Special Purpose Entities

Company’s CFO In 2001 Stated That Enron Has Established SPEs To Move Assets And Debt Off Its Balance Sheet And To Increase Cash Flow.

According To John, a University Law Professor ,Once SPE Is Formed By Enron, It Will Then Borrow Debt From Banks And Enron Would Guarantee That Debt .

In reality SPE founded by ENRON were used as a means of storage,transportation,or other energy related operations.

The cash flow of ENRON from its operations declined from positive 127 million dollar in 2000 to a negative of 753 million dollar in 2001.

ENRON finally filed for bankruptcy on December 2,2002 after Dynergy terminated the deal when STANDARD AND POORS downgraded ENRON^S debt below investment grade.

In JUNE 2001,ENRON Vice President Sherron Watkins was given the task of finding some assets to sell off but it was very difficult for her.

Watkins prepared a Memo regarding the various problems and placed it into the box but this Memo was not taken into consideration.

On August 22,Watkins handed CEO Lay a seven page letter and told him that ENRON would implode in a wave of accounting scandals” if no further action was taken.

THE WHISTLE BLOWER

THE WHISTLE BLOWER

Against Watkins letter Lay, the CEO ,arranged to have a ENRON’S Law Firm Vinson and Elkins that looked after all questionable deals.

Watkins continued to do her work and sold stock of 30000 dollar in August,2001 and some in late September.

In February 2002,she revealed the various facts regarding ENRON partnerships and finally resigned in November. But Watkins Revealed iall the facts only after ENRON filed for bankruptcy.

The Board

The Profits

Legislation

Conflict of Interest

Ethical Issues At Enron

THE MAJOR PLAYERS INVOLVED IN THE ENRON SCANDAL

Became the Chairman And Ceo in Feb,1986

He Drew Down His $4 Million enron credit line repeatedly and then repaid the company with the enron shares.

Kenneth Lay – The Chairman

Fastow`s Brighter Side Fastow joined Enron in 1990 And took it to soaring

hieghts. His expertise awarded him CFO excellence award for

capital structure management. He used to get support from enron `s president And

COO jeffrey k skilling . Fastow`s Darker Side

Fastow was accused of being mastermind behind the Enron`s scandal.

Andrew fastow - The Cfo

Fastow was accused of being

mastermind behind the Enron`s scandal.

He surrendered $30 million dollars in cash and also accepted 10 years .

Lea Fastow , was al so a culprit .

Fastow`s Darker Side

Held equally responsible for “

the enron scandal ”Involvement In :Government

deregulationsSecurities Fraud

Jeffery Skilling – The President and COO

Andersen Partner Complained About Fastow`s Plan To Contribute His Own Money Into Partnerships , Saying `Why Would Any Director In His Or Her Right Mind Ever Approve Such A Scheme?” `

Andersen Thought That “The Whole Thing Was A Bad Idea” But Is Convinced That This Is Such A Win- Win Thing, That Everyone Will Buy In.”

The U.S. Government Asserted That, After Investigation Of Enron Began, Following Its Bankruptcy , Andersen Destroyed/Shredded Thousands Of Documents In Houston, Portland, London And Possibly Other Locations

Andersen Was Convicted Of Felony Obstruction Of Justice And Ceased Auditing Public Companies In 2002; The Conviction Was Overturned.

Arthur Andersen

Andersen Also Provided Consulting Services, Helping Set Up And Opine On The Validity Of Enron`s Spe`s Under Accounting Rules .

Andersen Received $58 Million In Fees From Enron In 2000 (Less Than Half Of Which Was From Auditing Services) And $50-55 Million In 2001 .

Documents Produced For Congressional Investigators Show That Partners In Andersen`s Houston Office Debated Whether To Force Disclosure Of Billions In Off-balance Sheet Debt, But Decided Against It, Citing Potential Growth Of Fees From Enron To $100 Million Per Year .

Arthur Andersen’s Role

FRAUDULENT Practices OF VINSON & ELKINS

Watkins allegations of accounting fraud.

Professional misconduct by the Charges by the texas bar.

Legitimacy of EnroN`S business practices.

merrill lynch faced scrutiny by federal prosecutors and the sec for its role in enron`s 199o sale of nigerian barges .

overstated statement about guaranteed rate of return .

false statements and misleading information .

MERRILL LYNCH

October 2001 : Securities And Exchange Act Launches A Formal Investigation Into Its “Related Party Transactions”

November 8,2001 : Enron Restates Its Earning For First Three Quarters Of 2001

December 2, 2001 : Enron Files For Protection From Creditors In New York Bankruptcy Court

December 3, 2001 : Lays Off Five Thousand Employees

In 2001

In 2002 January 9 : The Justice

Department Announces That It Is Pursuing A Criminal Investigation Of Enron

January 24 : The Hearings On Enron Begin

February 4 : Improper Financial Transactions And Self Dealing

October 31 : The CFO , Fastow Is Indicted Of Being The Mastermind Behind The Scandal .

In 2003

February 3 : The Creditors Sue Lay And His Wife To Recover $70 Million In Transfers

July 11 : It Settled Its Allegations Of SEC Paying $300 Million .

January 14, 2004 : Fastow Agrees To Serve 10 Years In Prison .

July 8 : Lay Surrenders After Being Indicted .

BREAK UP OF ASSETS

INVESTOR LOSSES

COLLAPSE OF ELECTRICITY TRADING MARKET

CROSS COUNTRY ENERGY

CORPORATION.

LIQIUDATION OF ASSETS.

CANCELATION Of OuTSTANDING AND PREFERRED STOCK.

CONTD…

The End Of Enron

January 30 , 2006 : Lay And Skilling Trial Begins

May 25 , 2006 : Lay And Skilling Are Convicted Of Conspircy To Commit Securities And Wire Fraud . Lay Convicted In A Separate Bank Case .

July 5 : Lay Dies Of Heart Attack , Erasing His Conviction As A Person Who Dies Before An Appeal Is Not Considered Convicted .