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... and Electric Company is one of the three major utility companies in the region, along with Southern California Edison and San Diego Gas & Electric Company. August 14, 2001 CEO Jeff Skilling resigns stating "personal reasons. " October 12, 2001 Enron announces that it made a US $ 638 million loss during the third quarter of the fiscal year 2001. October 24, 2001 Andrew Fastow is ousted as the chief financial officer because of his involvement into questionable business transactions and partnerships. Jeff McMahon becomes Enron's Chief Financial Officer. October 31, 2001 Securities and Exchange Commission (SEC) upgrades its inquiry into Enron's dealings into a formal investigation on Enron's business transactions and accounting records.
November, 8, 2001 Enron suddenly revises its financial statements. The revision leads to reduced earnings by an additional US $ 586 million over the past four years, in large part due to losses with shady partnerships. It is also disclosed that Mr. Fastow earned US $ 30 million in assorted fees he charged and with profits from his involvement with the outside partnerships. Enron announces it must pay a US $ 690 million in debt. Another US $ 6 billion is due by next year.
Enron's CEO Lay calls the U. S. Secretary of the Treasury, Paul O'Neill and asks to discuss Enron's troubles, according to a spokesperson of the Treasury Department. November 9, 2001 Dynegy, a much smaller energy company, offers a rescue plan for Enron and proposes a buy-out of entire Enron for US $ 10 billion in stock. Dynegy also agrees to pay back more than $ 13 billion of Enron's debts, and Dynegy's major shareholder, ChevronTexaco, promises to provide Enron with an immediate US $ 1. 5 billion in operational funding. November 19, 2001 Standard and Poor, a major credit rating agency, downgrade Enron's debt to the status of "junk. " Dynegy realizes how really horrible is Enron's financial plight.
Dynegy withdraws its purchase offer. November 28, 2001 Dynegy terminates its agreement with Enron. December 4, 2001 Enron files for bankruptcy. This is largest Chapter 11 bankruptcy case in the U.
S. history. Its two major investors, Citibank and J. P Morgan, two banks, provide US $ 1. 5 billion in short term emergency funding.
Enron announces that it will immediately layoff 4, 000 employees from its Houston, Texas, headquarters. By that time many employees had lost up to 90 percent of their retirement savings as Enron's shares plunged. Enron files a law suit against Dynegy, claiming US $ 10 billion in imaginary damages, Enron claims that Dynegy is guilty of breaching earlier contract while Dynegy files a counter suit and attempts to gain ownership over the Northern Natural Gas Pipeline, one the prime assets with which Enron began its corporate history. December 6, 2001 Enron discloses that it paid more than US $ 50 million to 75 of its most successful traders in attempt to prevent these traders from leaving Enron as it intended to merge with Dynegy. From another series of Enron's revelations, the public finds out that Enron paid US $ 55 million in bonuses just a few days before filing for bankruptcy December 8, 2001 Amalgamated Bank of New York, a New York-based financial institution that is mostly owned by unions, files a law suit against 29 of Enron's top executives and board members. The bank claims that Enron's officials maliciously inflated the company's stock value, fraudulently gaining millions of dollars for themselves, using false financial records, just before the nose-dive of the Enron stock.
The suit requests that a federal judge freezes bank accounts containing over US $ 1 billion belonging to 29 Enron top executives and board members. The law suit stresses that the company illegally froze employees retirement savings (401 (k) savings), which by the time of the lawsuit become almost worthless anyway for the bulk of employees's aging were invested in Enron's stock. December 10, 2001 The US Department of Labor launches an inquiry into Enron's mishandling of employee retirement pensions. From 70 to 90 percent of former Enron's employees lost their retirement savings in the Enron's stock crash. at the same time, the SEC (the Securities and Exchange Commission) begins investigation into the role played by Enron's independent auditors, Arthur Andersen. December 12, 2001 The House Financial Services Committee proceeds with a hearing on Enron's financial troubles; speakers include officers from the Securities and Exchange Commission (SEC), Arthur Andersen (Enron's faithful accounting firm) and union representatives.
Joseph Bernardino, the CEO of Arthur Andersen, testifies that Enron might have committed "illegal acts" in financial accounting practices, this statement leads to a criminal investigation by the US Department of Justice. January 4, 2002 Enron and Dynegy come to the settlement of their dispute. Enron lost the legal battle and it turns over the ownership over the Northern Natural Gas Pipeline to Dynegy by end of January. January 10, 2002 The Department of Justice launches a criminal investigation of Enron.
Attorney General John Ashcroft and his Chief of Staff, David Ayres, refuse to participate in the investigation because Enron was a major contributor Ashcroft's failed 2000 senatorial bid. 4. Conclusions - how can investors and the public protect themselves from the Enron's kind of companies; lessons drawn from the Enron's experience. Many observers blame the recent Enron's collapse on the deregulation and free markets. Here is what writer Thomas Frank had to say at salon. com: "Enron was the peerless darling of the all those who believed that free markets were the acme of existence. Its wreckage is as good a place as any to sit down and take stock of the deregulated, privatized state into which we " ve been so rudely hustled over the last decade.
And here is what it looks like: Top management walking off with hundreds of millions of dollars while employees lose their jobs, investors lose millions and customers get to look forward to more rolling blackouts. Profiteering. Bought politicians. Stock market bubbles that eventually burst. Workers thrown out on the streets. Left to its own devices, this is what the free market does. " While this statement might be partially accurate, it is worth to remember when analyzing the collapse the Energy giant, that it did not fail in conditions of a pure free market.
It is generally assumed that in order for free markets to function successfully, they should be transparent and be free of government interference and patronage. This was certainly not Enron's case - Enron operated in a shady fashion, its accounting system involved a complex web of off-shore partnerships and holdings, specifically created with the purpose of deceiving the market, inflating profits by hiding debt. Enron's success in the United States and abroad often depended on government patronage and "privileges" obtained through political sponsorships and, in some cases, corruption practices. Healthy competition and the force of free market played a secondary role in the Enron's operation. It would be worth quoting a quite lengthy passage from the Guide to Enron Collapse by Darren Puscas at the Polaris Institute (web) in Ottawa, Ontario, Canada "Enron is the only company in history to be the subject of a full Amnesty International Report.
Beyond the now famous California energy crisis set off by Enron's (and others') greed, here are a couple of examples of their nastiness: Dabhol Power Plant in India - Many have heard the accusations that Vice President Cheney tried in 2001 to use his political muscle to help Enron, which was facing nonpayment by the Indian government, to sell its interest for $ 2. 3 billion to settle this dispute over Enron's investment in the Dabhol Power plant. Or they know that the National Security Council...
Free research essays on topics related to: criminal investigation, power plant, millions of dollars, natural gas, securities and exchange commission
Research essay sample on Enron A History And How The Company Imploded
