Analysis Of The Collapse Of Enron

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A documentary film released in 2005 called the Smartest Guys in the Room reveals the shocking collapse of Enron. The Smartest Guys, Kenneth Lay, Jeff Skilling, Andrew Fastow, Lou Pai, Clifford Baxtor, and Arthur Anderson, were all involved with America’s ultimate Corporation Scandal. But who do we blame? Enron had over 20,000 employees and was founded by Kenneth Lay, CEO of Enron, in 1985. Lay wanted to push his views of deregulation which pushed him to start the company (SGR). The first event that happened leading up to the downfall was the president, Mr. Borget, and his traders manipulating the company’s earnings and exporting the profits to their personal account. When Lay made the decision to not fire them, it definitely raised the …show more content…

Skilling then hired Andrew Fastow to cover the holes in Enron’s finances and make the company look profitable. Fastow found a loop hole to cover Enron’s debt, amounting over $30 billion by using special purpose entities by liabilities to subsidiary firms like well-known banks. Therefore, the banks knew what was going on also, and loaned money to Enron. Enron used the money to reward their employees “bonuses”. To meet Enron’s high demands of profits, Enron’s employees would falsify an energy shortage in California that started to profit Enron, however, made California in a $30 billion debt. After Bethany Mclean published “Is Enron Overpriced?”, the troubles at Enron started to become public because Skilling aggressively bullied Mclean over the question “How exactly does Enron make money”. It was not too long when Enron’s stocks started to decline and Skilling resigned because of a “personal matter”. Kenneth Lay became CEO again and tried to reassure his employees and investors that the business was doing good, but in reality, the employees lost their 401k funds in Enron’s stock. Then in 2001 Enron declared bankruptcy and tried to blame Fastow for the

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