Enron Scandal

Enron Scandal

Introduction

The business scenario and activities adopted in their execution have never been consistent. The business practices have undergone numerous changes and those changes have played a pivotal role in not only changing the fortune of the certain companies, but also entirely the course of the business practices.

Enron Scandals

Enron is amongst those few corporations of this country that have been surrounded by baneful scandals and controversies; which were not only effectively detrimental to its image but also its operations that were vital for its proper functioning and success. The exposure of the scandals that surrounded Enron eventually led to its bankruptcy. However, the two most prominent scandals regarding Enron were the exposure of its financial positions or its losses, and it's lobbying regarding the natural gas supply, and it's pricing.

Both these controversies surrounding the one of the most renowned companies in America raised stern and grave ethical issues regarding the business its business practice; which led a company from being rated as “America's one of most innovative companies” to a notorious bankrupted company.

Moreover, it is the financial debacle of Enron that guided it to bankruptcy. The whole controversy occurred when the net income of Enron showed a difference of almost a billion dollars, when after the GAAP rules were enforced to its net income. The huge difference from the profit to the net loss encompassing of over billion dollars was rather incomprehensible for many individuals and investors, which later held back from investing any further in Enron. Another activity that pushed Enron into this financial controversy was its mishandling and misuse of the SPEs that were being abused by Enron to escalate their own profits. This concealment of Enron's actual practices and ever increasing profits and then eventually the debacle, had adversely affected everyone who had his/her stakes at Enron (Gray et.al, 2005).

However, the financial fraud is not associated with the Enron's key business. Originally Enron was founded in 1985, as the leading natural gas pipeline company and energy providers, renowned for possessing one of the major interstate networks. Enron emerged as a pipeline company, whose major operations included buying gas and power from the producers and supplying them to the consumers. The fluctuation of prices and increased usage of the spot pricing provided Enron with a golden chance of acting as an intermediary between the producers and the consumers regarding the settling of the price. Moreover, the deregulation of ...