Enron paper Research Example | Topics and Well Written Essays - 1500 words

Enron - Research Paper Example Enron was a among leading promoters in restructuring of energy markets which led to the emergent of its name, but the name was later changed to energy country as a result of its invention in new global market. Enron was a pioneer company in the legend of elite of workers in financial world. The company acquired miscellaneous investments to its portfolio and had the capability of obtaining returns of 200% of its investments to shareholders. By 2000, Enron had become a massive company in the industry. They opened branches in South America, India Asia and a host of other European States and countries. They extended their functions by starting occupation in additional projects that they had started, and it is when they started the online manufacturing of energy and telecommunication facilities. They further introduced services such as, risk management, consulting services, internet broadband services, and the launch of outstanding products that protected against bad weather (Hutton 5). H owever, in October 16, 2001, the company was involved in some fraudulent activities and this led it to bankruptcy. On December 2, 2001, in Southern District of New York, Enron Company went ahead and filed for bankruptcy after it recorded a loss of an approximated $638 million in its third quarter earnings, and chose Weil Gotshal and Manges as their bankruptcy counsel. This bankruptcy was as a result of, top executives involved in huge scandals such as, money laundering, corruption and a series of other conspiracies. To add on top of that, they lost their goodwill, investments and confidence by admitting fraud in income of about four years, which was about $586. They also admitted to have hidden $3 billion in debt to create limited partnerships. Afterwards, they faced a massive deterioration in the stock market with, is $90 per share falling to less than $1 per share in 2000. (Bhatnagar et al. 8) Employees of Enron Corporation became affected in disastrous ways, stating form unemploy ment to their retirement savings getting lost in the fraud. Banks also became victims of circumstances by losing millions of dollars of investments that the company had acquired as loan, due to fake earning reports. The firm was sidelined by a number of its clients and workers resulting to them quitting out of business. The report of these financial frauds were preplanned, and systematically arranged to undertake fraudulent activities. The counterfeiting of strategies, embezzling of profits and hiding increased debt diminished the company’s stock value through the fraudulent activities, they were able to gain access in borrowing extra wealth and with this, and they were boosted. The statistics revealed that top executives gave incorrect audit reports about the company’s economic conditions. In February 2002, the company was inquired by Senate Commerce Committee and they later came out of bankruptcy in November 2004 (Bhatnagar et al, 10). Accounting Problems Enron start ed experiencing accounting problems in late 2001 that, compounded of some of its several businesses not doing well as required. In October 2001, Enron announced a series of asset losses which included an