Enron

2. Presentation By:

3.  Former Type : Public Company
 Industry : Energy
Founded : Omaha, Nebraska (1985)
 Founder(s) : Kenneth Lay
 Defunct December 2, 2001
 Headquarters Houston , United States
 Key People Kenneth Lay, Founder,chairmanAnd
CEO
Jeffrey Skilling,former President, CEO And
COO And Andrew Fastow, Former CFO
 Revenue $ 101 Billion (2000)
 Employees 22,000 (2000) {Approx.}

4.  One Of The World's Leading Supplier Of
Electricity, Natural Gas, Communications, And
Pulp And Paper .
Development Of Power Plants ,Pipelines .
CEO , CFO And Chairman Transformed Enron
Dramatic Growth
Fortune Named Enron "America's Most
Innovative Company" For Six Consecutive Years

5.  1985 : Houston Natural Gas
Merges With Omaha Based
Internorth Forming Enron
Corporation.
 2000 : Annual Revenue Touched
$100 Billion And Acknowledged
As The Sixth Largest Energy
Company .
 August 2001: The CEO Resigns
And Lay Takes Over As The New
CEO

7. Bankruptcy Filing Came After Series Of
Revelations' That Giant Energy Trader
Had Been Using Special Purpose Entities
Company’s CFO In 2001 Stated That
Enron Has Established SPEs To Move
Assets And Debt Off Its Balance Sheet
And To Increase Cash Flow.
According To John, a University Law
Professor ,Once SPE Is Formed By Enron,
It Will Then Borrow Debt From Banks
And Enron Would Guarantee That Debt .

8.  In reality SPE founded by
ENRON were used as a means of
storage,transportation,or other
energy related operations.
 The cash flow of ENRON from its
operations declined from positive
127 million dollar in 2000 to a
negative of 753 million dollar in
2001.
 ENRON finally filed for
bankruptcy on December 2,2002
after Dynergy terminated the deal
when STANDARD AND
POORS downgraded ENRON^S
debt below investment grade.

9.  In JUNE 2001,ENRON Vice
President Sherron Watkins
was given the task of finding
some assets to sell off but it
was very difficult for her.
 Watkins prepared a Memo
regarding the various
problems and placed it into
the box but this Memo was not
taken into consideration.
 On August 22,Watkins handed
CEO Lay a seven page letter
and told him that ENRON
would implode in a wave of
accounting scandals” if no

10.  Against Watkins letter Lay, the CEO
,arranged to have a ENRON’S Law Firm
Vinson and Elkins that looked after all
questionable deals.
 Watkins continued to do her work and
sold stock of 30000 dollar in
August,2001 and some in late
September.
 In February 2002,she revealed the
various facts regarding ENRON
partnerships and finally resigned in
November. But Watkins Revealed iall the
facts only after ENRON filed for
bankruptcy.

11.  The Board
 The Profits
 Legislation
 Conflict of Interest

13.  Became the
Chairman And Ceo
in Feb,1986
 He Drew Down His
$4 Million enron
credit line repeatedly
and then repaid the
company with the
enron shares.

14. Fastow`s Brighter Side
 Fastow joined Enron in 1990 And took it to soaring
hieghts.
 His expertise awarded him CFO excellence award for
capital structure management.
 He used to get support from enron `s president And
COO jeffrey k skilling .
Fastow`s Darker Side
 Fastow was accused of being mastermind behind the
Enron`s scandal.

15.  Fastow was accused of being
mastermind behind the Enron`s
scandal.
 He surrendered $30 million dollars in
cash and also accepted 10 years .
 Lea Fastow , was al so a culprit .

16.  Held equally
responsible for “
the enron scandal ”
Involvement In :
 Government
deregulations
 Securities Fraud

18.  Andersen Partner Complained About Fastow`s Plan To
Contribute His Own Money Into Partnerships , Saying
`Why Would Any Director In His Or Her Right Mind
Ever Approve Such A Scheme?” `
 Andersen Thought That “The Whole Thing Was A Bad
Idea” But Is Convinced That This Is Such A Win- Win
Thing, That Everyone Will Buy In.”
 The U.S. Government Asserted That, After Investigation
Of Enron Began, Following Its Bankruptcy , Andersen
Destroyed/Shredded Thousands Of Documents In
Houston, Portland, London And Possibly Other
Locations
 Andersen Was Convicted Of Felony Obstruction Of
Justice And Ceased Auditing Public Companies In 2002;
The Conviction Was Overturned.

19.  Andersen Also Provided Consulting Services, Helping Set
Up And Opine On The Validity Of Enron`s Spe`s Under
Accounting Rules .
 Andersen Received $58 Million In Fees From Enron In
2000 (Less Than Half Of Which Was From Auditing
Services) And $50-55 Million In 2001 .
 Documents Produced For Congressional Investigators
Show That Partners In Andersen`s Houston Office
Debated Whether To Force Disclosure Of Billions In Off-
balance Sheet Debt, But Decided Against It, Citing
Potential Growth Of Fees From Enron To $100 Million
Per Year .

20. Watkins allegations of
accounting fraud.
Professional misconduct by
the Charges by the texas bar.
Legitimacy of EnroN`S
business practices.

21.  merrill lynch faced scrutiny by
federal prosecutors and the sec
for its role in enron`s 199o sale of
nigerian barges .
 overstated statement about
guaranteed rate of return .
 false statements and misleading
information .

22.  October 2001 : Securities And
Exchange Act Launches A Formal
Investigation Into Its “Related Party
Transactions”
 November 8,2001 : Enron Restates Its
Earning For First Three Quarters Of
2001
 December 2, 2001 : Enron Files For
Protection From Creditors In New York
Bankruptcy Court
 December 3, 2001 : Lays Off Five
Thousand Employees

23. In 2002
 January 9 : The Justice
Department Announces That
It Is Pursuing A Criminal
Investigation Of Enron
 January 24 : The Hearings On
Enron Begin
 February 4 : Improper
Financial Transactions And
Self Dealing
 October 31 : The CFO ,
Fastow Is Indicted Of Being
The Mastermind Behind The
Scandal .

24. In 2003
 February 3 : The Creditors
Sue Lay And His Wife To
Recover $70 Million In
Transfers
 July 11 : It Settled Its
Allegations Of SEC Paying
$300 Million .
 January 14, 2004 : Fastow
Agrees To Serve 10 Years
In Prison .
 July 8 : Lay Surrenders
After Being Indicted .

25. INVESTOR LOSSES
COLLAPSE OF
ELECTRICITY TRADING MARKET
CROSS COUNTRY
ENERGY CORPORATION.

26. LIQIUDATION OF ASSETS.
CANCELATION Of
OuTSTANDING AND
PREFERRED STOCK.

27.  January 30 , 2006 : Lay And
Skilling Trial Begins
 May 25 , 2006 : Lay And
Skilling Are Convicted Of
Conspircy To Commit
Securities And Wire Fraud .
Lay Convicted In A Separate
Bank Case .
 July 5 : Lay Dies Of Heart
Attack , Erasing His
Conviction As A Person Who
Dies Before An Appeal Is Not