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Smartest Crooks Know Law is on Their Side

Enron scandal did not happen by itself. It was made to happen by some crooks with lots of help from other agencies. For example Arthur Andersen one of the largest audit and accountancy partnership went out of business by playing along. Where did Enron get such a clout so suddenly and so authoritatively? It could not have been coincidence that natural gases were deregulated in 1985 and also marked the founding of Enron. How much politicians in office or outside (but with power to help the company along the way) shall be a debatable point. Remember the company’s television commercial of not so long ago, ending with the reverberating phrase, “Ask why, why, why?” That question we may phrase it as Ask Who,who,who,who?

Enron was formed in 1985 by Kenneth Lay after merging Houston Natural gas and InterNorth. With the coming of Jeffrey Skilling it was time to set special purpose entities, and it took care of accounting loopholes to hide billions in debt from failed deals and projects. Chief Financial Officer Andrew Fastow and other executives were able to mislead Enron’s board of directors and audit committee as well as pressurize Andersen from looking closely at high-risk accounting issues.

Stock prices of Enron at US$90 per share in mid-2000 caused shareholders to lose nearly $11 billion when it plummeted to less than $1 by the end of Nov.2001.On Dec.2 2001 Enron filed for bankruptcy. It was the largest corporate bankruptcy in U.S. History and also largest auditing failure. Employees and shareholders received limited returns in lawsuits, despite losing billions in pensions and stock prices. As a consequence of the scandal, new regulations and legislation were enacted to expand the reliability of financial reporting for public companies.

On looking back what was really the compelling reason for the United States Congress to pass legislation deregulating the sale of natural gas? It was all too plain that it was to give traders such as Enron to sell energy at higher prices, allowing them to thrive. After producers and local governments decried the resultant price volatility and pushed for increased regulation, strong lobbying on the part of Enron and others, was able to keep thefree market system in place.

McLean and Elkid in their book The Smartest Guys in the Room, “The Enron scandal grew out of a steady accumulation of habits and values and actions that began years before and finally spiraled out of control.”Risk takers ought to be awarded for their guts. It is an American quality’ In the end it proved crooks jumped and the spectator applauded bravely watching their motions calculated to deceive there was no hoop to begin with. When some express outrage at government controls think of Enron. It was fraud perpetrated on unsuspecting nation by people who were responsible to set checks and balances and defend the man on the street who voted them to office.(ack:wikipedia)

Free market shall allow such entities as Enron to exploit the public with the same ease as raising prices in commodities artificially by vested interests. In the case of state intervening there can be failures as mentioned in Gulf Oil Spill.

Pity that democracy is earmarked for humans withtheir faults:poor judgment greed, malice and lack of opportunites in their youth or neglected.

benny

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