What happened at Enron?

Everyone knows at least creates a bit about the history of Enron and the devastation it in the lives of employees. It is a story that belongs in any discussion of ethical accounting processes and what happens when standards and ethics in the personal greed thrown.

Enron began in 1985, the sale of gas to gas companies and businesses. In 1996, energy markets have changed so that energy prices were now set by competition among energy companies instead of state regulation. With this change, Enron began to more than one provider using a conventional energy function, negotiating energy contracts instead of buying and selling natural gas. Enron's rapid growth sparked enthusiasm among investors and drove the share price. As Enron grew, it expanded into other areas such as Internet services and its financial contracts became more complicated.

To continue to grow at this rate, Enron began to borrow money to invest in new projects. However, because this debt would their earnings look less impressive, Enron began to create partnerships to keep debt from the books. A partnership of Enron, Chewco Investments (name of the Star Wars Chewbacca) allowed Enron created 600 million U.S. dollars debt on the books that showed the government and people to hold their Enron shares. If the debt does not seem to feature in the reports of Enron, Enron made a lot more successful than it actually was. In December 2000, Enron claimed its profit tripled in two years.

In August 2001, sent Vice President Sherron Watkins of Enron, an anonymous letter to the CEO of Enron, Kenneth Lay, describing accounting methods that she felt could Enron "implode in a wave of accounting scandals." Also in August, CEO Kenneth E-mail to employees saying he expected Enron stock prices upward sent Lay. Meanwhile, he sold his own Enron stock.

On 22 October, the Securities and Exchange Commission (SEC), that Enron was investigated. On 8 November said, Enron had overstated results of the last four years by $ 586,000,000 and that he owed about $ 6,000,000,000 of debt next year.

With these announcements, Enron's shares plunged. This decrease causes certain agreements with investors that it is necessary for Enron, the money made to pay back immediately. When Enron could not come, up with the money to pay his creditors, said in Chapter 11 bankruptcy.