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Home > Financial Services > Mutual Funds > ENRON Case: An Incident to Remember

ENRON Case: An Incident to Remember

ENRON was founded in 1930 as a not very big energy firm. It was located in Houston, Texas and, in only fifteen years, got to be the seventh biggest company in the United States. Before their bankruptcy, they had 21,000 employees in more that 40 countries around the world. Fortune magazine named this company “America’s Most Innovative Company” for six consecutive years. However, Enron got to be completely famous when, in 2001 it was announced that they were being sustained, mostly, by systematic, institutionalized and well-planned accounting fraud. Their European operational process filed for bankruptcy at the end of that year. The fraud consisted in an irregularity in the financial report where they stated fictitious and exaggerated incomes, so that they could inflate the cost of the shares.

In 1985, Kenneth Lay, the CEO, established the name Enron Corporation. This company was comprised in the business of transmitting and distributing electricity and gas through the United States and, in general, the operation of pipelines and power plants among other kinds of infrastructure. There were fatal and lamentable consequences as a result of the erroneous management of the business. Thousands of employees lost all the money that they saved for all their lives. A group of shareholders of the company filed a lawsuit against 29 Enron executives and directors, accusing them of insider trading and misleading the public. The indictment covers a wide-ranging variety of crimes such as making false statements to auditors and banks, bank fraud, securities fraud, money laundering, wire fraud, insider trading and money laundering conspiracy. Mr. Lay assured being completely innocent and misled by the people around him.

Thus, Enron Corporation has entered the common conscious as one of the most, if not the most fraudulent case and as a symbol of corruption and fraud. Because of this, many changes that demonstrate the high importance of the case have been made. For instance, Enron Field, a stadium in Texas was renamed Minute Maid Park in order to avoid negative publicity. Besides, a movie was made, it was named “Enron: The Smartest Guys in the Room”. It is based on the bestseller with the same name and documents the story of this unforgettable corporation.

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