*Note: This article was originally written in 2014.
The ENRON Scandal 1997-2002
The infamous ENRON: a name synonymous with corporate corruption, and Epic Failure – It’s a story of typical white collar crooks masquerading as Wall Street execs, and it’s effects were felt globally!
When light was shed on the Enron corporation’s fraudulent activities, most of the stockholders’ money was never recovered due to liability issues… and possibly because a chunk of it went to the political campaign that got President George W. Bush elected to office (but that’s neither here nor there). Granted this wasn’t an over-the-top Bond-villain plot (with a certain lack of giant lasers holding the world ransom), it was still a tremendously sinister scheme hatched by a cabal of shadowy board members.
Throughout 2000 and 2001, the state of California underwent a series of rolling blackouts. These power outages were due to a combination of fraudulent activities on behalf of Enron including but not limited to: market manipulations leading to an 800% increase in wholesale prices, illegal pipeline shutdowns, and artificially capped electrical prices!
Enron also collaborated with GE on Phase Two of a project to renovate the Dabhol Power Plant in India, investing over $900 million! In 1996 the Indian government assessed the obscene costs of the plant and decided they couldn’t afford the bill, so rather than negotiating on a more affordable price, the concrete monstrosity was abandoned by Enron.
It all started with the Valhalla Oil Scandal in 1987 when the company gambled half of its funds away. Enron Chairman and CEO, Ken Lay, claimed ignorance and blamed ‘rogue’ (senior) executives. A decade later, when accusations of financial fraud were brought up once again, Lay once again claimed to know nothing.
In court, Jeffrey Skilling, Enron’s Cheif Executive Officer, testified before Congress, while Lay and Chief Financial Officer, Andrew Fastow, decided to plead the Fifth. Conveniently John C. Baxter committed suicide in 2002 and Ken Lay died of a heart attack in 2006 at 64. Skilling on the other hand was sentenced in 2006 to 24 years in prison.
Here’s the shocking figures that were revealed during the case against Enron:
Keneth Lay earned $300 million in compensation and stocks over the course of four years, while 20,000 employees lost their jobs and $2 billion in pensions and retirement funds evaporated into thin air.
One billion dollars of stock funds had been deposited into off shore accounts.
They created fake subsidiaries to store their debt with names like J.E.D.I. and ChewCo.
How exactly did all that go unnoticed by the authorities?!
Well, you see…
Enron headed up the political movement for government deregulation of energy corporations. In 1996 Governor Pete Wilson passed deregulation legislation which enabled Enron to withhold its earnings and inflate its stock prices.
The problem with corporations not being held accountable by governments is that they’re cold mindless machines designed to profit, and if those at the controls dangerously cut corners to increase profits regardless of the workers getting hurt in the process, there should be someone there to stop them.
Once the Enron scandal came to light other nefarious deeds started to come out of the wood work:
Without the government, corporations by themselves do not have any moral imperative, at their primal level they exist solely to gain revenue, and as we all know, money is the root of all evil. Without government intervention we’d be at the mercy of the Umbrella Corporation, Luthor-Corp, OsCorp, Cyber-Dine Industries, InGen, Weyland-Yutani, Goliath National Bank, Initech, and Dunder Mifflin!
Or maybe we already are…?
The really scary thing today is that some international corporations are far more powerful than any single government body on the planet, not to mention how much pull corporate lobbyists have in Washington.
I guess we’ll all just have to wait and see how this all plays out…
*Written in 2014*
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“Enron: The Smartest Guys in the Room” (documentary – 2005)