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Enron Corporation is a former American company specializing in energy, commodities, and services. The story of business started in 1985, when the Houston Natural Gas Company and Nebraska’s Natural Gas Company InterNorth merged into one natural gas pipeline company called Enron. Enron took part in transmitting and distributing electricity and natural gas all over the United States. By the year 2000, the Corporation has grown into the nation’s seventh-largest corporation, valued at almost 70 billion dollars. In addition to gas, the company’s branches traded other commodities, such as water, coal and steel. This switch from a pipeline company to the trading strategy was innovative in the market and caused an increase in corporation’s stock price. For six consecutive years Enron was awarded the name of the "America's Most Innovative Company" by the Fortune magazine. The company was perceived as a new successful business model by the Americans. Moreover, the CEOs of the company, Jeff Skilling and Ken Lay, were named as the smartest guys in the room. They were ruling the ship that was too powerful to ever go down. Unfortunately, in 2011 it was revealed that the financial reports of the company were faked and did not represent the actual problems with the Corporation’s finance. The Enron scandal posed many serious questions concerning accounting practices in the USA, auditing standards, overall philosophy of corporate greed, fraud and corruption in the corporate world. The Enron story influenced the implementation of the Sarbanes–Oxley Act in 2002, which is one of the strictest laws on accounting practices and standards. The scandal also affected the disclosure of fraudulent activities by the Arthur Andersen accounting firm.

The documentary “Enron: the smartest guys in the room” proposes a complex view on the Enron’s problem. Revealing the fraudulent schemes of the Corporation and the illegal practices that involve other large market players, the video suggests that Enron’s story is only an example of the overall deceptive and misleading corporate culture in the US. Other examples of corporate fraud include the cases of Tyco International, WorldCom, Peregrine Systems and Adelphia. Thus, it is important to understand, that fraudulent corporations were the result of inadequate controls, laws and corporate culture.

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The smartest guys and the CEOs of Enron, who created the offshore companies in order to cover misleading bookkeeping practices, were Kenneth Lay, the Chairman and Chief Executive Officer of the Corporation, Jeffrey Skilling, the President, Chief Operating Officer and CEO, and another CEO, Andrew Fastow. They used various methods, practices and circumstances in order to keep the stock rising, when the company was experiencing losses; for example the deregulation in electricity market, buying the ratings and the mark-to-market accounting. The corporation established poor corporate ethics of greed for money. Former employees described the feeling that they were only valued based on how much profit they could produce. Everyone in the organization felt pressured to do deals and post earnings. Thus, the corporate culture of Enron was rather an absence of ethics and culture. In this constant pressure, even the fair and moral employees could be forced to act unethically. They were under the pressure of losing their job and followed the example of the silent and unethical behavior of thousands of colleagues.

The ironic motto of Enron “Ask Why?” was originally intended to drive to thoughts why it is impossible to be successful, to make profits, to bring innovations and provide employees with the best social and retirement package and to point that Enron is the corporation that solves all ”Why?”. After the bankruptcy, the “Ask Why?” motto was colored with ironic meaning of why the laws were ineffective, why the corporate culture was poor, why the 20 000 of employees were silent and lost their jobs and social packages, why the auditors did not find the fraud and why the whole story happened.

The negative consequences of Enron bankruptcy were the lossof investors and employees and the energy crisis in California. Enron employed many people who were pulled out of the labor market after the bankruptcy. In addition, the investors who had bought the skyrocketing shares lost their money as the stock was overpriced in value. Besides, according to Bryce R. (2004), during 2000 and 2001, Californians faced energy shortages due to Enron’s bankruptcy. The positive consequences of the Enron story are the implementation of Sarbanes-Oxley act and proper regulations, the reveal of fraudulent schemes and practices in some US companies and the public acknowledgement and disapproval of corporate problems.

To conclude, it is important to reaffirm that the story of Enron, the most shocking bankruptcy and major fraud in American history, served as an excellent lesson for authorities as well as for corporate governors. Poor ethics and greed played cruel trick with Enron, confirming that illegal practices and unethical behavior is detrimental. Despite the tremendous losses related to Enron’s bankruptcy, the story won appropriate attention of publicity and initiated the improvements in accounting practices. 

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