When many people hear the word Enron, they immediately associate it with the most important accounting scandal of our lifetimes. Enron was an American gas company that began as the Northern Natural Gas Company in 1931. Internorth, a holding company in headquartered in Omaha, Nebraska, purchased the Northern Natural Gas Company and reorganized it is 1979. Enron arose from the 1985 merger of Houston Natural Gas and Internorth. After building a large, new corporate headquarters in Omaha, the new Enron named former Houston Natural Gas CEO Kenneth Lay as CEO of the newly merged company, and soon moved Enron 's headquarters to Houston, Texas. After becoming the newly created top executive, Lay later became chairman of the board and hired Jeffrey Skilling as Chief Executive Officer. Under their leadership, Enron adopted an aggressive growth strategy. Andrew Fastow, Enron’s Chief Financial Officer, helped create the complex financial structure for the new Enron. (Reinstein, et all, 2002)
Products and Services
Enron was originally involved in the transmission and distribution of electricity and gas throughout the United States, and the development, construction, and operation of power plants, pipelines and other infrastructure worldwide. The corporation had a variety of products that it offered such as petrochemicals, plastics, power, pulp and steel. Enron also had a variety of service lines such as Energy and Commodities Services, Broadband Services, Capital and Risk Management Services, Energy Transportation and Upstream Services, and Commercial and Industrial Outsourcing Services.
Government regulation is one way that society shows it cares about responsible conduct in business. In the early 1990s the Congress of the United States of America passed legislation deregulating the sale of electricity. It had done the same for natural gas some years earlier. Enron took advantage of the lack of regulation of its energy trading
References: Ackman, D., The Enron Chain Saw Massacre, Forbes.com, January 11, 2002 Nussbaum, B. 2002. Can you trust anybody anymore? Business Week, January 28: 31-32 Perkins, J. (2004) Confessions of an Economic Hit man. San Francisco, CA Reinstein, A., Weirch, T.R., Accounting Issues at Enron, The CPA Journal, December 2002 United States District Court, Class Action Complaint for violations of federal securities laws, February 5, 2002 Walsh, L., The Enron scandal, Socialism Today, Issue 63, March 2002