Essay about Financial Frauds: The Collapse of Enron

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Enron Scandal
Enron Corporation is an energy based corporation in Houston Texas (U.S.A).It was formed in 1985 by Kenneth that employed around 21,000 people by mid-2001. They used Fraudulent accounting technique that allowed it to be listed as the seventh largest company in the United States, and it was expected to dominate the trading it had virtually invented in communications, power, and weather securities. Instead of becoming largest energy corporation, it became the largest corporate scandal in history, before the WorldCom and became emblematic of institutionalized and well-planned corporate fraud. There was never power shortage or energy crisis in California before this scandal.Using tape recordings of Enron traders on the phone with California power plants, the film chillingly overhears them asking plant managers to "get a little creative" in shutting down plants for "repairs." Between 30 percent and 50 percent of California's energy industry was shut down by Enron Corporation a great deal of the time, and up to 76 percent at one point as price of electricity was drove nine times higher. Also financial statements of Enron were very confusing to analysts and shareholders. In addition its complex business model and unethical practices required that the company use accounting limitations to misrepresent earnings and modify the balance sheet to indicate favorable performance. “Bush told several interviewers that he didn't want to place a federal cap on energy prices. He went further than that on CNN, saying, "If there's any environmental regulations that's preventing California from having a 100-percent max output at their plants -- as I understand there may be -- then we need to relax those regulations." (docs.google.com)

Bankruptcy
In European countries Enron filed bankruptcy on November30, 2011 and it sought Chapter 11 protection in the U.S. on December 2.Enron ‘s global reputation was undermined, by persistent rumors of bribery and political pressure to secure contracts in Central and South America, in Africa, and in the Philippines. As a result 4,000 people lost their jobs. Nearly 62% of 15,000 employees' savings plans relied on Enron stock that was purchased at $83 in early 2001 and was now practically worthless. The day when Enron filed its bankruptcy their employees were told to vacate building in 30minutes. On January 17, 2002 Andersen countered that it had already ended its relationship with the company when Enron became bankrupt. (www.wikipedia.org)
Enron in India
Especially controversial was its contract with Maharashtra Board of Electricity of $30 billion where it is alleged political connections with Bush and Clinton administrations to excerpt pressure on Board. Company presented that energy pant will run on liquefied natural gas shipped by a tanker imported from Middle East. But a prospect was considered that India has lot of coal, a much cheaper fuel to generate electricity and it is also a traditional and common method of generating power in India. In addition the Central Government of India would assume essentially all risks in the
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