Business Law 100, Enron Failure

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Enron senior management gets a failing grade on the truth and disclosure and a passing grade on arrogance and greed. For Fifteen years Enron was a paper tiger with few questions ever asked concerning its earnings profitability or business practices. The deceit and deception by Enron management seems to be the environment of a divisive marketing campaign that Kenneth Lay, Jeffery Skilling and Andrew Fastow hide while touting Enron. In reality Enron was one of the greatest Ponzi schemes to date, all hat and no horse. The management was superb at financial fraud and unparalleled at persuading the public and investors that they were respectable and legitimate. The money they stole bought a lot of respect and they spent freely on image and luxury in proving Enron was for real The internal working relationship between corporations or business within Enron would not have been any different than what we saw from the outside looking in. Could there have been changes to the interrelationship of businesses within Enron? Sure, would change made a difference? Maybe not, this is the fundamental issue of why Enron was created in the first place. We must look at the initial key elements of Enron’s beginning, as well as its management, and not be dissuaded from looking at the how and why those individuals ran Enron’s business the way they did. By looking at the relationship of Enron’s internal businesses without first looking at management and others with fiduciary responsibility would be putting the carriage before the horse we would be forgetting that the actual creation or structure of Enron’s business entities were put in place by the management responsible for running Enron and were the real reasons for its failure. We would be remiss for not looking at the impact Kenneth Lay, Jeffery Skilling and Andrew Fastow had on the interactions of the businesses Enron owned and ran. It was their financial manipulation of the businesses within Enron for corporate as well as personnel financial gain that we should look at first, as well as how the executive management of Enron circumvented the purported safe guard that are supposed to be in place to protect investors and stockholders from fraud and corruption. We must also look at the” Gate Keepers Role” of the Lawyers, Accountants and Bankers to see what part they played in allowing Enron to dupe the public ,stockholder and investors. It was the executive management of Enron that pulled the strings and threw the switches controlling how the internal corporations and businesses functioned within Enron during its Rolling Thunder approach to earnings and profitability. Through cronyism coupled with arrogance allowed, Kenneth Lay, Jeffery Skilling and Andrew Fastow, to think of their selves as invincible in the running of Enron. They felt that within their Scope of Authority that they were actually running Enron effectively for the betterment of the stockholder while they stole millions. All the rules were in place but were willfully and skillfully ignored with the pervasive winking of the eye at the regulations and the law led to Fraudulent Misrepresentation. Although a business code of ethics existed within Enrons corporate structure its actual use was almost nonexistent, in” fact it was suspended by the Board of directors for Andrew Fastow because of his dealings with the internal limited partnerships he controlled”( Executive Action no 15 2/2002). Fastow was a key player, who reported directly to the CEO, Jeffery Skilling, in the complex design of companies with in Enron that solely did business with itself. This was counter to the Arms Length Transaction policy required by law. By Skilling and Fastow being on both sides of an investment they were fraudulently breaking the law. But that was the only way Enron could structure a deal and make money by creating a corporation or business, finance the investment, with banks and or investment money and show that as income, while hiding...
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