Deception, Fraud, and the Collapse of Enron Essay -- Business Manageme

Deception, Fraud, and the Collapse of EnronIntroductionFrom the Statess 7th most valuable company in declination 2000, to acompany in ruins by early 2002, Enron has been involved in one of themost incredible reverses of fortune ever. With shares riding high onWall Street at $84.87 on the 28th December 2000, and awards much(prenominal) asAmericas most innovative company from peril Magazine 6 yearsrunning, and Energy Company of the Year from the pecuniary Times excessively in 2000, it looked as though Enron were promising to be one ofthe biggest American companies of all time.Things started going drastically wrong. As spacious losses were beingreported, share prices tumbled, and Enron, within the space of only ayear, was on the verge of collapse. I shall be investigating thefactors of this collapse, some of them imputable to pipeline and economicfactors, but mostly through deception and fraud. outlineThe timeline of events from when Enron were at the top to the bottomof the busin ess world is quite outstanding. (See type 1, Appendix).The collapse seems to span a time of around 5 months, from opulent 2001to January 2002. During this time, many scandals have come out, whichsuggest Enron has played a major part in its own downfall, throughunsuccessful diversification to superficial the accounts. As these thingsadd up, it is no surprise Enron is now in the blank space it is.In 2000 the company recorded record turnovers of $100m (See Figure 2,Appendix), a $60m append from the previous year. Shares were sellingat a high price, meaning that afterlife expansion would have beenpossible due to high investment in the company. A collapse at thispoint seemed absolutely out of the question, it unspoilt seemedimpossible, with futurity investment and high turnovers.In October 2001, the third quarter results were published, presentation amysterious loss. This of course set the share price falling, asinvestors lost confidence about Enrons long term capabilities. Thi swas the ascendent of what was going to be a difficult few months forEnron, as varied scandals and study was released.The reasons for this loss have not been explained fully but in that respect aremany different possibilities, some through bad business decisions,some through bad accounting, and some from surplus purchases. Allof these have meant that Enron was facing debts of around $690m.Enron consists of ... ...e problems, they might not be in the do they aretoday. With independent audits, financial irregularities might havecome to shadowy sooner. Poor communications with shareholders andpotential investors meant they were unaware of the situation they weregetting themselves in. Enron also spent a large amount of money onunnecessary items where perhaps better investment would have been asafer option.Overall, the factors all immingle to the failure of Enron, and at timeof writing it is still unclear the lead reasons for the downfall, andhow much of the information releas ed by newspapers and the companyitself is reliable. Based on the information available at the time, itis clear there are many deceptions and wretched business decisions thathave meant Enron have a very bleak future ahead of them.BibliographyWebsites www.bbc.co.uk (20th February-10th March 2002) www.telegraph.co.uk (report on 1/12/01) www.enron.com (March 2002) www.observer.com (March 2002)Other Sources sovereign Newspaper 27th February The Economist (December 2001) Nuffield Business and Economics Students Book The Money Programme- Inside the Enron Scandal (BBC2 April 4th 2002)