Enron Corporation Case Study

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Register to read the introduction… This allowed them to either sell these assets outright or to sell interests in them to investors, and record the income as earnings which top Enron officials called “monetizing” or “syndicating” the assets.
Enron also created off balance sheet entities, a way to sell or organise its assets, not to independent third parties, but to “unconsolidated affiliates” businesses like White wing, LJM, JEDI, the Hawaii125-0 Trust and others that were not included in Enron’s financial statements but were so closely associated with the company that Enron considered their assets to be part of Enron’s own holdings. Enron allowed up to 50 per cent of asset’s to be shifted into off balance sheet
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Andrew Fastow was fired because of LJM transactions & his excessive compensation from those transactions. He sold 687000 shares of Enron stock for $33.7 million form June 1996 to November 2001 he also earned at least $45 million from the LJM SPEs which were named after his wife and children. Andrew S. Fastow was the indispensable tactician.
Time line of events to the collapse of Enron Enron, a very complex company heavily involved in energy trading and distribution, was the 7th largest corporation in the U.S. (16th largest in the world). Despite its enormity and its massive profits before last year’s fall, it managed to pay no taxes in 4 of last 5 years.

Jeffery Skilling, who had replaced Kenneth Lay as Enron CEO in December 2000, abruptly quit on 14th August 2001, becoming the 6th senior executive to resign in a year, Lay takes over, resuming his old CEO post.

Enron, mostly through the workings of its former Chief Financial Officer Andrew S. Fastow, had thousands of offshore partnerships (SPEs), an accounting mess, and hid over 1 billion in debt through some of them. It is this complex arrangement that led to its downfall when this hidden debt information was disclosed in October

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