...It was suggested that the President had tried to repair the damages that were caused the Watergate scandal in the first article. From a speech President Nixon had given, it showed that there were a lot things that still needed to be done regarding the scandal. The article stated that the officials under the Watergate scandal were cheating, lying and engaging in illegal activities while in high positions of the government. The people believed that the president did not stand up to the crisis and that he had only done the bare requirements for the situation at hand. The people stongly believed that President Nixon should have done something more to eliminate the Watergate scandal as soon as it was leaked. The article had also showed that the people were not happy with President Nixon’s actions by only accepting the resignations of H.R. Haldeman and John Ehrlichman, (Genovese, 1999). He had also accepted the resignation of Attorney General Kleindienst and appointed Elliot Richardson and instructed him to handle the crisis. Finally, the President had made the correct decision by dismissing his White House Counsel John Dean. The second article portrays President Nixon as a good, moral leader. It tried to defend the President from being impeached by acknowledging his achievements. The article also showed that he was human and not perfect. The actions of the President by trying to resolve the crisis, led to speculations by the Chicago Tribune's editorial to leave office...
Words: 780 - Pages: 4
...“ENRON SCANDAL” The Enron Corporation was the biggest in a series of scandals that damaged the reputations of corporations in the United States. It represented one of the largest fraud scandals in history. As a result, the company was said to force to file for bankruptcy in 2001 of December. This is where Sarbanes-Oxley Act was imposed with stricter rules on auditors and made corporate executives criminally liable for lying about their accounts. Enron was known as a provider of products and services related to natural gas, electricity and communications to wholesale and even retail customers. As an accounting major student I recognized that there were several doubtful accounting schemes that Enron used just to manipulate the employees, investors, customers and everyone. While I found that there are a lot of issues to expound on, the main issue is how fraudulent their company was especially having misrepresented their public financial reports. The financials presented by Enron were restated. In 2000, the profitability was less than 1%, becoming clear that Enron’s profits were realizable only if the quality of their revenue is good but if not it is not realizable. Enron used SPEs or Special Purpose Entity this is used to keep Enron’s debts and losses away from its balance sheets, therefore allowing it have a good credit rating and look good in front of the investors. In this case it is purely seen as an investment scam. In the company were I worked on last year...
Words: 590 - Pages: 3
...| The Enron Scandal | | Introduction Enron Corporation was an American energy, commodities and services company based in Houston, Texas. From the 1990's until December 2001, Enron was famous throughout the business world and was named by Fortune as "America's Most Innovative Company" for six consecutive years. It grew wealthy due largely to marketing, promoting power, and its high stock price. Before its bankruptcy, Enron employed about 21,000 staff in forty countries and was one of the world's major electricity, natural gas, communications, and pulp and paper companies, which claimed revenues of $100.8 billion in 2000. Enron gave the illusion that it was a steady company with good revenue which was not the case, as a large part of its profits were made on paper through a creatively planned accounting fraud. Deep debt and surfacing information about hiding losses gave the company big problems and in the late 2001 Enron declared bankruptcy under the United States Bankruptcy Code. The collapse was followed by a series of revelations on how the executives manipulated Enron's success. The Fraud Schemes The Enron scandal, revealed in October 2001 was a management fraud involving top executives of Enron who deliberately manipulated the accounting structures in order to conceal their losses and debts so that the corporation appeared to be performing favourably. They adopted mark-to-market accounting, an accounting system based on market value, which was then inflated; the...
Words: 2330 - Pages: 10
...The Enron Scandal Background Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 20,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with claimed revenues of nearly $101 billion in 2000.[1] Fortune named Enron "America's Most Innovative Company" for six consecutive years. At the end of 2001, it was revealed that its reported financial condition was sustained substantially by institutionalized, systematic, and creatively planned accounting fraud, known as the Enron scandal. Financial Frauds Enron’s downfall is basically the accumulated effect of its unethical practices in financing and reporting. Enron's non-transparent financial statements did not clearly depict its operations and finances with shareholders and analysts. In addition, its complex business model and unethical practices required that the company use accounting limitations to misrepresent earnings and modify the balance sheet to portray a favorable depiction of its performance. Enron's accounting and financial transactions is designed to keep reported income and reported cash flow up, asset values inflated, and liabilities off the books. The combination of these issues later led to the bankruptcy of the company: Aggressive Revenue Recognition As an energy supplier, Enron can be considered as merchants or agents. As merchant...
Words: 869 - Pages: 4
...The Enron Scandal and Moral Hazard Prof. Leigh Tesfatsion Department of Economics Iowa State University Ames, IA 50011-1070 http://www.econ.iastate.edu/tesfatsi/ Last Revised: 3 April 2011 The Enron Scandal and Moral Hazard • Enron, the 7th largest U.S. company in 2001, filed for bankruptcy in December 2001. • Enron investors and retirees were left with worthless stock. • Enron was charged with securities fraud (fraudulent manipulation of publicly reported financial results, lying to SEC,…) • QUESTION: In what ways are security market moral hazard problems at the heart of the Enron bankruptcy scandal? Brief Time-Line of the Enron Scandal • Enron was a Houston-based natural gas pipeline company formed by merger in 1985. • By early 2001, Enron had morphed into the 7th largest U.S. company, and the largest U.S. buyer/seller of natural gas and electricity. • Enron was heavily involved in energy brokering, electronic energy trading, global commodity and options trading, etc. Brief Time-Line of the Enron Scandal…Continued • On October 16, 2001, in the first major public sign of trouble, Enron announces a huge third-quarter loss of $618 million. • On October 22, 2001, the Securities and Exchange Commission (SEC) begins an inquiry into Enron’s accounting practices. • On December 2, 2001, Enron files for bankruptcy. : Oct – Dec 2001 Regulatory Oversight of Enron Auditors Arthur Anderson Audit Committee (Directors) SEC Company Report Shareholders Enron...
Words: 1722 - Pages: 7
...Busicom2 – 05/02/10 Executive Summary In 2001 fell Enron after one of the biggest scandals in the modern economy. Creative accounting, oppressive management and deceptive communication are in the heart of that affair. The first ruse was a cheating accounting. The company used the mark to market system, but in an illegal way for they calculated the assumed profits for the next 20 years, ie long term assumed profits. Moreover, they did not declare all the expenses (only a third for the trade with the station in the North Sea) and manipulated subsidiaries, which are told independent when they belong at least 3% of their capital, to hide debts and boost earnings. Besides, the management in Enron used the staff performance review which conducts the staff to work hard in order to be in the group of the ‘winners’. There were actually rewards for good employees, pension and savings, so that they would be interested in the good form of the firm and would not complain against the scam. Enron also managed to corrupt some politicians, bankers, analysts by pressurizing them or by giving great advantages and funds. For instance, the Energy Regulation Board earned one million dollars. Their marketing strategy was a diversification of the production of the corruption of analysts who would promote those new products. When the frauds were discovered by an employee and exposed to the Securities and Exchange Commission, the free fall began for Enron. The shares dropped from 90$ to 1$, the...
Words: 365 - Pages: 2
...Research Study INTRODUCTION Accounting scandals in business firms arise with the disclosure of financial misdeeds by trusted executives of corporations. Examples of Accounting Fraud: • Merging short and long term debt into one amount to improve the perceived liquidity of the company • Failing to disclose risky investments or “creative” accounting practices • Over-recording sales revenue • Under-recording expenses (i.e. depreciation expense) Accounting fraud leads to many serious problem for everyone not only for the perpetrator. Accounting fraud causes problem in the market place and the economy. As a result in most cases, investors' loose large sum of money due to the misrepresentation of financial position and financial result of the company. Also, because of this, there is lack of trust in the market, accounting system, and in the company in which accounting fraud was committed from the investors. Employees in that company are at rest of losing their job because of the scandal. WHY DOES ACCOUNTING FRAUD OCCUR? Fraud are triggered by three elements; rationalization, perceived pressure, and perceived opportunities. Whether the fraud benefits the perpetrator directly, or indirectly, such as benefiting the perpetrator’s company, the three elements are always present. Rationalization- perpetrators find some sort of rationalization that makes their unethical behavior seem acceptable. Perceived Pressure- perpetrators are faced with some kind of pressure...
Words: 7029 - Pages: 29
...Alexis Isbell 11/1/2012 Case Project The Enron Scandal Near the turn of the 21st century, a seemingly large Dallas-based gas company sent a shockwave around the world in what would become known as the Enron scandal. The Enron scandal would cause many people to not only lose their jobs and their ways of life, but it would also cause people to become weary of these incredibly large companies. The Early Years (1985-early 1990’s) Enron was the brainchild of Kenneth Lay, when he brought about the merger of Houston Natural Gas and Omaha-based InterNorth. Enron Corporation created the first nationwide gas pipeline network in America, and would continue to grow throughout the 1990’s. In the early 90’s, after the United States government deregulated natural gas, Enron started growing into an extremely large company, whom employed over 21,000 workers. Enron would continue to grow into the nation’s seventh largest company. Enron’s profits skyrocketed through the roof once they were able to freely sell and buy natural gas in the United States. Enron would continue to grow into one America’s most profitable companies in the late 1990’s, but the argument could be made that is what possibly led to their drastic, and frankly embarrassing downfall. The Later Years (mid-late 1990’s – 2001) As previously stated, Enron would become one the nation’s most profitable companies in the late 1990’s. “Enron’s reported annual revenues grew from under $10 billion in the early 1990s...
Words: 1581 - Pages: 7
...The Watergate Scandal Richard Milhous Nixon was the thirty-seventh President of the United States of America from 1969 until 1974. Nixon completed his first term as President in 1973 and was re-elected for the position for the next four years. However, Nixon would have his time in the White House cut short by the series of events that occurred in the twenty-six months that followed the Watergate burglary. On June 17, 1972 five men, one White House employee and four Cubans, broke into the Watergate Office Building in Washington, DC in an attempt to bug the Democratic National Committee (DNC) office. The break in and the events that took place afterwards led to the resignation of Richard Milhous Nixon on August 8, 1974. The morning of June 18, Nixon was at his home in Key Biscayne, FL. when he read a headline about the Watergate break in. The idea was out of this world and Nixon did not believe what he was reading. Nixon dismissed the story as a political prank (Nixon 625-626). James McCord, Bernard Barker, Virgilo Gonzalez, Eugenio Martinez, and Frank Sturgis had been arrested and charged with second-degree burglary by the Washington police (WHT 820). McCord, a former CIA officer, was employed by the Committee to Re-elect the President (CRP) as a security consultant. Ironically McCord was supposed to prevent the very things he was doing to the DNC. Nixon telephoned Charles Colson, a special counsel to President Nixon, that evening to discuss the Watergate break in. Colson said...
Words: 2069 - Pages: 9
...The Watergate Scandal is one of the most serious political crimes committed by the President of the United States and his staff. Richard Nixon, anxious of losing his reelection, made an unacceptable move to place himself and the Republicans above of the Democratic party. The Watergate Scandal started with a few men , who broke in to the Democratic National Committee building, in order to plant listening devices, and stop leaks of any information regarding his earlier Presidency. The first article Watergate: The Unfinished Business, makes the reader willing to look deeply into the innocence of President Nixon. The author decided to present an important key events, rather than make a direct statement about Nixon's guilt. As a society, we want...
Words: 649 - Pages: 3
...by creating special purpose entities. These entities were created to show investors the downside of risk. I believe the main reason the stock increased so much is due to corruption of Arthur Andersen, an independent audit firm. On Wikipedia’s website there was a statement from Enron’s Power Committee and it appears they were placing blame on the Andersen firm. They were quoted as saying, "… evidence available to us suggests that Andersen did not fulfill its professional responsibilities in connection with its audits of Enron's financial statements, or its obligation to bring to the attention of Enron's Board (or the Audit and Compliance Committee) concerns about Enron's internal contracts over the related-party transactions" (“Enron Scandal”). After reading about...
Words: 765 - Pages: 4
...City in most urban gothics tend to be a labyrinth of mystery, a source of corruption and evil. The role that the city plays in creating evil is not limited to the labyrinth nature of the city which protects the crimes of antagonists and villains. The creation of evil and is association with the city is also influenced by the early Victorian perception of the city and the crimes that occurred in the city. Irene Adler the primary antagonist and villain, in the Arthur Conon Doyle’s “Scandal in Bohemia” (1891), outwits Sherlock Holmes – One of the greatest detectives and brilliant minds in literature to date. The nature in which if she operates, is helped by the nature of the city which encourages, promotes and even hide the criminality and violence....
Words: 1283 - Pages: 6
...out’ principle also prevails in financial markets, public trust in the functioning of financial markets has declined as a result of major financial reporting scandals involving Enron, Tyco, WorldCom, Parmalat and others. Also, massive overvaluations of equity that occurred in the second half of the 1990s and in the early 2000s have been singled out as being caused by misinformation and manipulation of financial results ( Jensen, 2002). More generally, when information about the operation of public companies is false, misleading or opaque, trust in financial markets is likely to be affected adversely. This gives financial market participants a stake in the disclosure of timely and meaningful information, including by assuring that the quality of financial reporting by public companies is as high as possible. And this in turn puts the spotlight on the role of the gatekeepers of the public trust, in particular accounting firms, banks, rating agencies, supervisors and regulators. This contribution addresses the key questions of why public trust is in decline, why agency relations have broken down within companies and within gatekeepers, and how trust in financial markets can best be restored. It will be argued that, in answering these questions, it will be necessary to go beyond recent corporate scandals. Gatekeepers of the public trust play a central role in modern, complex...
Words: 376 - Pages: 2
...In Focus: The Enron Scandal This corporation was identified by Fortune Magazine as America’s Most Innovative Company 1996 to 2001 (Lindstrom par. 1). It was garnered as the 7th largest company on the Fortune 500 list in the US in 2000 and it placed sixth in the largest energy company in the world in 2000 (“Enron Corporation” par. 6). Who does not know the Enron Corporation, a giant in the commerce of energy? But among all these prestigious titles, there is another that the Enron Corporation is famous for, the Enron Scandal. Enron was the result of a merger between two gas pipe line companies in 1985. The Houston Natural Gas Co and a Nebraska based company called InterNorth. The fusion between the two became the Enron Corporation in 1986 (“Enron Corporation” par. 2). The firm experienced a rapid growth as it shifted from being a gas pipeline company into a “global energy trader (“Enron Corporation” par. 6).” Enron enjoyed profuse economic benefits and experienced revenues amounting up to 100 billion dollars by 2000 (“Enron Corporation” par. 6). The firm ventured to other facilities like Internet broadband called Enron Online (Lindstrom par. 9). For a company who reported to be harvesting so much profit and having so many investments would boggle your mind on why Enron still broke down. Where did Enron go wrong? What brought this billion dollar business down into bankruptcy? It was in the year 2001 that the company’s stability was put into question. Enron ...
Words: 689 - Pages: 3
...The Enron scandal Tobias Pavel 910422 Mylene Encontro 850224 Chalmers University of Technology Finacial Risk, MVE220 Examiner: Holger Rootzén 2012-12-02 Göteborg This report has been written and analyzed by both group members jointly. Abstract From the 1990's until the fall of 2001, Enron was famous throughout the business world and was known as an innovator, technology powerhouse, and a corporation with no fear. The sudden fall of Enron in the end of 2001 shattered not just the business world but also the lives of their employees and the people who believed that their soar to greatness was genuine. Their collapse was followed by a series of revelations on how they manipulated their success. Introduction Enron shocked the world from being “America’s most innovative company” to America's biggest corporate bankruptcy at its time. At its peak, Enron was America's seventh largest corporation. Enron gave the illusion that it was a steady company with good revenue but that was not the case, a large part of Enron’s profits were made of paper. This was made possible by masterfully designed accounting and morally questionable acts by traders and executives. Deep debt and surfacing information about hiding losses gave the company big problems and in the late 2001 Enron declared bankruptcy under Chapter 11 of the United States Bankruptcy Code. Many factors affected Enron's surge to the top and its sudden fall. In this report we will discuss and present what we think...
Words: 2734 - Pages: 11
