THE ENRON CASE

The Enron case

The Enron case

In 1930, Northern Natural Gas, a Nebraska-based gas pipeline company was founded and thus began The Enron Corporation as one of the worlds's leading energy companies. In December 2001, Enron filed the largest corporate bankruptcy claim in United States history. The company's collapse led to investigations of both Enron and Arthur Andersen, an accounting firm employed by Enron. Investigators were alerted to charges that Enron deliberately concealed its financial problems, misled investors, and failed to pay income taxes.

Since January, 2001 Enron's image has been tarnished making their stock today worthless. With corrupt executives and the help of their auditing firm, Enron has been able to provide investors with false financial information which gave investors a false picture of the company's true state of affairs. The collapse of Enron has made thousands of employees lose their life savings in 401k plans and company stock holdings. Investors were defrauded out of billions of dollars and everyone began asking the question, "How did this happen, and can we prevent this from happening again?"

Company History

The Enron Corporation was renamed InterNorth in 1980 and bought Belco Petroleum in 1983. InterNorth also helped build the Northern Border Pipeline to link Canadian fields with the United States markets. (C-Span.com, 2002) Houston Natural Gas (HNG) formed in 1925 and bought Houston Pipe-Line Company in 1956 and Valley Gas Production in 1963. HNG sold its original distribution properties to Entex in 1976. In 1984, the executives refocused HNG on natural gas and added Transwestern Pipe-line and Florida Gas Transmission. (WashingtonPost.com, 2002)

By 1985, HNG operated the only transcontinental gas pipeline. In 1985, InterNorth bought HNG, creating the United States' largest natural gas pipeline system. Once these companies merged, it was renamed Enron. The headquarters were then moved from Omaha to Houston. In 1992, Enron and three partners acquired control of a 4,100-mile pipeline in Argentina.

Enron bought several gas businesses from gas leader Williams in 1993 and began its power marketing business as the global electricity markets began deregulating.

In 1997, Enron bought its own electric utility, Portland General Electric (PGE). In 1998, Enron began power trading in Australia and became the first power marketer in Argentina. The company continued to expand purchasing power plants near New York City as well as buying more companies globally such as Wessex Water in the United Kingdom and companies in India and China. In 2000, Enron contributed its retail residential energy business to The New Power Company. This contribution was to compete in deregulated US markets.

Enron also purchased international metals marketer "MG plc" in a 2 billion dollar deal, then sold Houston Pipe Line Company to American Electric Power in 2001. It also agreed to sell Portland General Electric (PGE) to another Oregon utility, Northwest Natural Gas. Later that year, the company announced that it would sell its Indian gas assets to UK oil and gas group and they also announced plans to sell their power plant in India.

In 2001, Enron was in talks with a small rival company, ...