Enron Context Flashcards
When was Enron formed?
Enron was formed in 1985 by a merge of two energy companies
Who founded Enron?
Ken Lay
How did Enron’s revenue grow?
Between 1996 - 2000, Enron’s revenue grew by around $87 billion
When did Enron go bankrupt?
December 2001
What is Mark to Market accounting
Mark to Market accounting is being able to recognise revenue when there is none.
What happened with Blockbuster?
In 2000, Enron signed a 20 year contract with Blockbuster and predicted to earn $100 million in revenue from it. The contract ended early due to bandwidth and technology failing and therefore they couldn’t have earned that. However, they still reported to have earned $100 million from it.
What was LJM
Fastow created LJM (named after his wife and children) as a side company to push Enron’s debts over to so that it appeared Enron had no debt on their financial reports.
Who were the auditors?
The auditors came from the company ‘Arthur Andersen’ and were reported to have been paid by Enron to look the other way when scanning their financial reports.
What happened to Arthur Andersen?
Arthur Andersen was convicted of obstruction of justice and found guilty of shredding evidence. They lost their license to engage in public accounting.
What happened to Ken Lay and Jeff Skilling?
In October 2006, Skilling was sentenced to 24 years in prison and found guilty of 18 counts of conspiracy and fraud and 1 count of insider trading. Ken Lay died of a heart attack in the time between the verdict and sentencing.
How many people lost their jobs?
20,000
How much did Enron donate to George w Bush’s campaign?
$2,000,000
What happened to underperforming workers at Enron?
The bottom 10% were fired annually
How much money was lost in retirement funds after the Enron scandal?
$1.2 billion
How much did Skilling pay his lawyers?
$23 million
