Did Enron’s bankers, auditors, and attorneys contribute to Enron’s demise? If so, what was their contribution?
Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant tilted “E” in front, slowly revolving in the Texas sun. Enron’s “E” suggested to Chinese feng shui practitioner Meihwa Lin a model of instability, which was perhaps an omen of things to come. The Enron Corporation, which once ranked among the top Fortune 500 companies, collapsed in 2001 under a mountain of debt that had been concealed through a complex scheme of off-balance-sheet partnerships. Forced to declare bankruptcy, the energy firm laid off four thousand employees; thousands more lost their retirement savings, which had been invested in Enron stock. The company’s shareholders lost tens of billions of dollars after the stock price plummeted. The scandal surrounding Enron’s demise engendered a global loss of confidence in corporate integrity that continues to plague markets, and eventually it triggered tough new scrutiny of financial reporting practices. To understand what went wrong, we’ll examine the history, culture, and major players in the Enron scandal.