Until late 2001, Enron was the world’s biggest energy trading company. It posted one billion dollar profit in 2001.
Now it’s clear these profits were false and those figures were wildly inflated by the aggressive accounting techniques. This made it possible for the Enron executives to make millions by selling Enron shares.
I keep on wondering how it’s possible such a big fraud can happen but apparently it’s possible. The Enron board ‘failed’ to spot the wrong figures. So did accountants Arthur Andersen.
Many big Wall Street firms invested also in Enron’s obscure subsidiary companies, although they knew it was to improve Enron’s balance sheet. Enron spent $250 million on fees to these firms in 2001…
If there were analysts that wrote bad reports about Enron, their investment houses came under big pressure as they could be cut out of the lucrative Enron business.
All this kept going until 28 November 2001, when Enron imploded.