Chinahand Posted May 25, 2006 Share Posted May 25, 2006 Kenneth Lay and Jefferey Skilling the Chairman and CEO of Enron have been found guilty of fraud and conspiracy. The company at its height was valued at $70 Billion and employed over 20,000 people; it collapsed in 2001. The really frightening thing was that an awful lot of its business was simply illusory, tied up in accounting structures that are so complex that almost no one understood them. But the pundits etc lapped it all up and the shares soared and soared and soared. The companies downfall started when a single analyst kept trying and trying to understand the accounts and couldn't get them to work ... he kept plugging away and eventually uncovered the huge empty shell at the centre of the company. Lay's net worth was estimated at $350 million in 2000 now he's up for 45 years in jail Skilling managed to amass about $100 million by 2000, he could be sentenced to 185 years. Oh how the mightly can fall!! ____________________________________________________________________________ Some brief historical definitions: Feudalism: You have two cows. Your lord takes some of the milk. Fascism: You have two cows. The government takes both, hires you to taken care of them and sells you the milk. Communism: You have two cows. You must take care of them, but the government takes all the milk and may give some back to you. Capitalism: You have two cows. You sell one and buy a bull. Your herd multiplies, and the economy grows. You sell them and retire on the income. And now, "Enron Style": You have two cows. You borrow 80% of the forward value of the two cows from your bank then buy another cow with 5% down and the rest financed by the seller on a note callable if your market cap goes below $20B at a rate 2 times prime. You now sell three cows to your publicly listed company, using Letters of credit opened by your brother-in-law at a 2nd bank, then execute a debt/equity swap with an associated general offer so that you get four cows back, with a tax exemption for five cows. The milk rights of six cows are transferred via an intermediary to a Cayman Island company secretly owned by the majority shareholder who sells the rights to seven cows back to your listed company. The annual report says the company owns eight cows, with an option on one more and this transaction process is upheld by your independent auditor and no Balance Sheet provided with the press release that announces that Enron as a major owner of cows will begin trading cows via the Internet site COW.com (cows on web). Pity the poor Auditor, eh? Link to comment Share on other sites More sharing options...
Gladys Posted May 25, 2006 Share Posted May 25, 2006 There again, you just have the arrogance to believe that whatever you say or do is right! Link to comment Share on other sites More sharing options...
LoneWolf Posted May 31, 2006 Share Posted May 31, 2006 The company at its height was valued at $70 Billion and employed over 20,000 people; it collapsed in 2001. The really frightening thing was that an awful lot of its business was simply illusory, tied up in accounting structures that are so complex that almost no one understood them. But the pundits etc lapped it all up and the shares soared and soared and soared. The companies downfall started when a single analyst kept trying and trying to understand the accounts and couldn't get them to work ... he kept plugging away and eventually uncovered the huge empty shell at the centre of the company. Enron was organised on a multi national basis and the evidence of corruption at the top in no way detracts from the innovative work done by companies in the group. Energy markets, in particular, are still grieving the loss of Enron. This is true in the States, in Europe and in the UK. Enron devised an impressive range of products which helped to provide liquidity in immature markets and drove prices downwards relentlessly. WE all benefitted. Markets in the US have done slightly better than elsewhere in the wake of Enron's demise. In Europe, and that includes the UK markets, there is little if any liquidity to speak of. This has resulted in, frankly, amazing volatility and we have all suffered in so much as energy prices have risen sharply out of all proportion to the actual supply and demand position. We could do with another company like Enron .... next time without the corrupt people at the top. Link to comment Share on other sites More sharing options...
Lonan3 Posted June 2, 2006 Share Posted June 2, 2006 Enron is a scandal so enormous that it's hard to get your mind around it. Not just a single financial disaster, but a jigsaw of interlocking scandals, each outrageous in its own right. There's Enron the Wall St. con game, where company bookkeepers used sleight of hand to turn four years of steady losses into stunning profits. There's Enron the reverse Robin Hood, which stole from its own employees even as its executives were hauling millions of dollars out the backdoor. There's Enron's Ken Lay the Kingmaker, who used the corporation's fraudulent wealth to broker elections and skew public policy to his liking. And then there are the Enron coverups, as documents are shredded and the White House seeks to conceal details about meetings between Enron and Vice President Cheney. The world may well need an innovative energy company - but it certainly does not need another Enron. Link to comment Share on other sites More sharing options...
LoneWolf Posted June 2, 2006 Share Posted June 2, 2006 The world may well need an innovative energy company - but it certainly does not need another Enron. Another company like Enron would be a gift from the gods. Always provided the people at the top are not corrupt. The Enron operation throughout Europe, incidentally, was not corrupt, was innovative, was very successful, provided momentum and liquidity to the newly established energy markets and much ,much more. Focussing on the corruption problems stateside doesnt do justice to the smart traders, analysts et al who made it a success. Its "hard to get your mind around it" but Enron were in the vanguard of those who set out to liberalise Europe's energy markets and we have all benefitted from their activities. The corruption and dishonest accounting in the stateside operation were not relevent in any way to the success of the operation in the Europe. Glad to say that many [ex] Enron employees, including several who I have met myself at various venues in the UK, have been snapped up by other market participants because their expertise was and still is highly prized. Not all bad then ? Link to comment Share on other sites More sharing options...
Amadeus Posted July 7, 2006 Share Posted July 7, 2006 Another twist in the story then: Ken Lay, Former Enron Chief, Dies Apart from being a sad event for anyone involved, this might also have implications on the whole Enron case: Legal doctrine stacks up to erase Lay's conviction And Wikipedia went loopy over it: Did he or didn't he?: wiki-ing Ken Lay's death All that's missing now is a movie about it - oh wait, already done.. Link to comment Share on other sites More sharing options...
localyokel Posted July 8, 2006 Share Posted July 8, 2006 Another twist in the story then: Ken Lay, Former Enron Chief, Dies Apart from being a sad event for anyone involved, this might also have implications on the whole Enron case: Legal doctrine stacks up to erase Lay's conviction And Wikipedia went loopy over it: Did he or didn't he?: wiki-ing Ken Lay's death All that's missing now is a movie about it - oh wait, already done.. Apparently Kenny died at a very fortuitous time. As he has not been formally sentenced (although formally found guilty) it is believed that might have died without any claim on his estate being possible by anyone associated with the Enron collapse. I'd say if Mrs Kenny Lay and all those little Lay's are saddened by his passing, that bucket load of cash that they get to keep will cheer them up a bit. In fact if he didn't do it deliberately I'd be checking Mrs Lay's cupboards for any special ingredients. He might have thought the estate would be secured but in the eyes of the world he still died a total scumbag. Link to comment Share on other sites More sharing options...
feelslikeitshould Posted July 8, 2006 Share Posted July 8, 2006 It wouldn't suprise me if he wasn't actually dead at all. I mean, with that amount of money and corruption in parts of the US, everything has its price. Including a death certificate.... Link to comment Share on other sites More sharing options...
Lonan3 Posted July 9, 2006 Share Posted July 9, 2006 From CNN: Lay's death of a heart attack early Wednesday morning has left a cloud of uncertainty as government officials and plaintiffs attorneys all contemplate how to go after Lay's dwindling estate. The main issue surrounds Lay's conviction of 10 counts of conspiracy and fraud. Because Lay died before he had the chance to appeal, not only does his conviction get thrown out under a legal doctrine called abatement, but it is now as if he had never been indicted in the first place. And without a conviction, the government is going to have a hard time recouping any financial restitution from Lay or his estate. Legal experts said the government can still pursue civil forfeiture proceedings and that civil litigants can still launch a legal battle against Lay's family and estate. But without Lay's conviction as proof in their case, plaintiffs are facing some challenges. For instance, if a defendant is deceased, civil claimants can't seek punitive damages, according to Joel Androphy, partner at Houston-based law firm Berg & Androphy. Any civil lawsuits would have to be limited to compensatory damages, or those losses that were actually incurred by an individual, he said. Lawyers who were taking aim at Lay are now reassessing their options. Link to comment Share on other sites More sharing options...
T Reznor Posted July 17, 2006 Share Posted July 17, 2006 It wouldn't suprise me if he wasn't actually dead at all. I mean, with that amount of money and corruption in parts of the US, everything has its price. Including a death certificate.... when an ex-president of the USA turns up to your funeral anything is possible, hey 'Kenny boy'... Link to comment Share on other sites More sharing options...
Albert Tatlock Posted July 17, 2006 Share Posted July 17, 2006 How UK-US extradition works. Link to comment Share on other sites More sharing options...
LoneWolf Posted October 23, 2006 Share Posted October 23, 2006 The case against Skilling closed last night when he was sentenced to 24 years in prison. This may seem a harsh punishment, but he was responsible for runing the lives of many decent individuals and negating the efforts and reputations of everyone who worked so hard at building Enron into a massive and innovative organisation. Their efforts will forever be forgotten and Skilling's will be forever remembered. Sad. Sentenced Link to comment Share on other sites More sharing options...
Alias Posted October 24, 2006 Share Posted October 24, 2006 How UK-US extradition works. Blunkett slipped that one through, I seem to remember the media was focused on something else and so it wasn't really covered. Basically the US do not need to show evidence to get a british citizen extradited, yet the UK authorities would have to supply strong evidence to a judge. Link to comment Share on other sites More sharing options...
thebees Posted October 25, 2006 Share Posted October 25, 2006 So they goto prison for 24years, will be out in 12...still they'll have quite a stack of cash to come out to, more than I'll earn in the next 12 years to be sure. Link to comment Share on other sites More sharing options...
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