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 such(prenominal) asAmericas most innovative company from component Magazine 6 yearsrunning, and Energy Company of the Year from the monetary Times in any case 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 rangy 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 ascribable to business enterprise and economicfactors, but mostly through deception and fraud. psychoanalysisThe timeline of events from when Enron were at the top to the bottomof the business world is quite outstanding. (See habitus 1, Appendix).The collapse seems to span a time of around 5 months, from sublime 2001to January 2002. During this time, many scandals have come out, whichsuggest Enron has played a major(ip) part in its own downfall, throughunsuccessful diversification to little the accounts. As these thingsadd up, it is no surprise Enron is now in the patch it is.In 2000 the company recorded record turnovers of $100m (See Figure 2,Appendix), a $60m maturation from the previous year. Shares were sellingat a high price, meaning that incoming expansion would have beenpossible due to high investment in the company. A collapse at thispoint seemed absolutely out of the question, it honorable seemedimpossible, with hereafter investment and high turnovers.In October 2001, the third quarter results were published, demo amysterious loss. This of course set the share price falling, asinvestors lost confidence about Enrons long term capabi lities. Thiswas the start of what was going to be a difficult few months forEnron, as variant scandals and knowledge 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 unnecessary purchases. Allof these unite meant that Enron was facing debts of around $690m.Enron consists of ... ...e problems, they might not be in the assign they aretoday. With independent audits, financial irregularities might havecome to wispy 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 acquiesce to the failure of Enron, and at timeof writing it is still unclear the fine reasons for the downfall, andhow much of the information released by newspapers and the companyitself is reliable. Based on the information available at the time, itis clear there are many deceptions and unfortunate 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 self-governing Newspaper 27th February The Economist (December 2001) Nuffield Business and Economics Students Book The Money Programme- Inside the Enron Scandal (BBC2 April 4th 2002)