However, Enron should not be viewed as an aberration, but as something that can happen again (Gibney, 2005). In the wake of the Enron and other corporate accounting scandals, the Sarbanes-Oxley Act was passed in 2002. Lives that were valued at millions were reduced to $20,000. Accounting firm Arthur Anderson was convicted of obstructing justice, and 29,000 people at the firm lost their jobs. Everything they had worked for was gone when $2 billion in pensions disappeared. Meanwhile, 20,000 Enron employees lost jobs and health insurance. Enron CEO Jeff Skilling unloaded his stock while encouraging employees to keep their shares. While corporate leaders assured employees that there were no accounting irregularities, they quietly sold their stock in the preceding months before the bankruptcy occurred in December 2001. Employees and shareholders were kept in the dark about the company’s finances. “How exactly did Enron make its money?” asked Bethany McLean, a reporter for Fortune magazine who was the first to question Enron’s finances in March 2001 (Gibney, 2005).Īfter September 11, 2001, the Securities Exchange Commission launched an investigation into Enron. The financial press, however, began to ask questions about Enron’s finances. The traders had gambled away all of Enron’s reserves, and Lay had known all along about the risks (Gibney, 2005).įrom 1998 to 2000, Enron’s gross revenues rose from $31 billion to more than $100 billion. There was a 1987 investigation of two Enron executives at the oil trading unit in Valhalla, New York that revealed offshore accounts and phony books. Enron transformed into a high-tech global enterprise that diversified into trading energy, water, weather derivatives, broadband and electricity.Įarly on, problems at Enron emerged. In 1988, the deregulation of electrical power markets took effect, and Enron transformed from a traditional natural gas energy company focused on energy delivery through gas pipelines to an energy broker company that brought buyers and sellers together (Sims & Brinkmann, 2003). However, in the words of Stein and Pinto (2011), “Our understanding of what transpired at Enron is by no means complete.”Įnron was created in 1986 from a merger of Houston National Gas and InterNorth (a natural gas pipeline company) with Ken Lay as its chair and CEO (Stein & Pinto, 2011).
#ENRON THE SMARTEST GUYS IN THE ROOM SOUNDTRACK MOVIE#
Enron’s rise and fall is the focus of numerous articles in the mainstream, trade and scholarly literature along with mass market books as well as the movie that forms the basis of this paper, “Enron: The Smartest Guys in the Room” (Gibney, 2005). Enron is a story about America’s largest corporate failure at that point in history-and a story about human tragedy.
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