In 2002 Congress held hearings to investigate the collapse of
In 2002, Congress held hearings to investigate the collapse of Houston-based energy giant Enron Corp., aiming to discover how to protect against similar disasters. The spectacular implosion of Enron led to the largest corporate bankruptcy in U.S. history and billions of dollars in losses for investors in the company’s debt and equity securities. According to a 217page report from a panel of Enron’s independent directors, Enron’s former chief financial officer Andrew Fastow and former chief executive Jeffrey Skilling devised a complex scheme involving limited partnership arrangements that allowed some of the company's top executives to take millions of dollars “they should never have received.” The document also revealed that Enron’s former chief executive and chairman Kenneth Lay personally approved partnership arrangements that led to enormous liabilities being kept off of Enron’s balance sheet, thereby misleading investors as to the company’s financial soundness. Enron’s collapse was not only scrutinized, by more than a dozen Congressional committees, but it also became the subject of a criminal investigation by the U.S. Department of Justice.
A. Explain how the Enron fiasco can be seen as a manifestation of the other people’s money problem.
B. How could it have been avoided?

Membership TRY NOW
  • Access to 800,000+ Textbook Solutions
  • Ask any question from 24/7 available
  • Live Video Consultation with Tutors
  • 50,000+ Answers by Tutors
Relevant Tutors available to help