Names; David Gai

Instructor;
Class; History of the US Economic
November 24, 2015
Enron Company
Enron Company was an America Energy, Commodities, and Services
Company based in Houston, Taxes. It was one of top World Company that
make billions of dollars every year. It was run and managed by the following
people, Kenneth Lay, founder, Jeff Skilling company executive officer, Andrew
Fastow chief financial officer. The above mention top Enron officers play a
leading role on the rise and fall of Enron Company. Here are some of the
ways used by Enron top executive to run the Company, Accounting practices,
Mark to market accounting, insider trading, and power deregulation.
The issue of power deregulation was caused by the lobbies in
California, for example Senator Phil Gramm, husband of Enron Board
member Wendy Gramm and also the Company second largest recipient
campaign contribution from Enron. Persuaded the legislative to pass the
legislating Californias Energy trading Commodity deregulation. Despite
warning from prominence consumers group that stated, this legislative will
give traders too much influence over commodity, the legislative was passed
because of Senator Phil Gramm influence. Therefore, as a result of

deregulation law, the power rolling blackout increased from 3 to 38 blackout

which gave them billions of dollars. On top of that, Enron traders intentional
encouraged the removable of power plant from the market during California
Energy Crisis by encouraging suppliers to shot down plants to perform
unnecessary maintenance. That actions affected many businessman and
customers.
Another factor that lead to the rise and fall of the Enron Company was
the Accounting practices. Enron financial chief officer Andrew Fastow
instructed it employee to used deceptive, bewildering and fraudulent
accounting practices. The Enron employee were instructed to hide the
Company loses by making the future profit to be the current deal (creative
accounting). Besides that, the Enron top executives adapted the system of
Insider trading because they knew Company is losing billions of dollars
quarterly. Therefore they told the Investors to buy more share because the
prices is going to go up per share.
Moreover, Enrons top executive officers made a bad deals with the
foreign power plants such as Nigerian power plants and Brazilian power
plants. For example they committed fraud and false books and recorded
(Merrill Lynch). Besides that, board itself were making bad deals the banks
such as Citigroup Inc., and JP and Morgan Chase to dodgy accounting in
return for big fees. In addition to that, the banks also used complex financial
transaction to boost Enron anemic cash flow to match its profit growth on
paper.

In conclusion, all this factors such as accounting practices, mark to

market accounting, insider trading, and power deregulation that has been
discussed above contributed to the rise and fall of Enron Company. The main
goal of the Enron top management was to make money by committing fraud.