Enron Corporation (former NYSE ticker symbol ENE) was an American energy company based in Houston, Texas. Before its bankruptcy in late 2001, Enron employed approximately 22,000 and was one of the world's leading electricity, natural gas, pulp and paper, and communications companies, with claimed revenues of nearly $101 billion in 2000. 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". Enron has since become a popular symbol of willful corporate fraud and corruption. The scandal also brought into question the accounting practices of many corporations throughout the United States and was a factor in the creation of the Sarbanes-Oxley Act of 2002.
Enron filed for bankruptcy protection in the Southern District of New York in late 2001 and selected Weil, Gotshal & Manges as its bankruptcy counsel. It emerged from bankruptcy in November 2004 after one of the biggest and most complex bankruptcy cases in U.S. history. On September 7, 2006, Enron sold Prisma Energy International Inc., its last remaining business, to Ashmore Energy International Ltd. Following the scandal, lawsuits against Enron's directors were notable because the directors settled the suits by paying very significant sums of money personally. The scandal also caused the dissolution of the Arthur Andersen accounting firm, affecting the wider business world.
In early 2007, Enron changed its name to Enron Creditors Recovery Corporation, reflecting its status as a predominantly asset-less shell corporation. Its current goal is to liquidate all remaining assets of the company. For most of 2007, Enron continued to operate under the name Enron Corp. by filing a Doing Business As, or "dba" certificate in Harris County, Texas.
Early history
Enron traces its roots to the Northern Natural Gas Company , which was formed in 1932 in Omaha, Nebraska. It was reorganized in 1979 as the leading subsidiary of a holding company, InterNorth. In 1985, it bought the smaller and less diversified Houston Natural Gas.
The separate company initially named itself "HNG/InterNorth Inc.", even though InterNorth was the nominal survivor. It built a large headquarters complex in Omaha. However, the departure of ex-InterNorth and first CEO of Enron Corp Samuel Segnar six months after the merger allowed former HNG CEO Kenneth Lay to become the next CEO of the newly merged company. Lay soon moved Enron's headquarters to Houston after swearing to keep it in Omaha and began to thoroughly re-brand the business. Lay and his secretary, Nancy McNeil, originally selected the name "Enteron" (possibly spelled in camelcase as "EnterOn"); but when it was pointed out that the term approximated a Greek word referring to the intestines, it was quickly shortened to "Enron". The final name was decided upon only after business cards, stationery, and other items had been printed reading Enteron. Enron's "crooked E" logo was designed in the mid-1990s by the late American graphic designer Paul Rand.
Enron was originally involved in transmitting and distributing electricity and natural gas throughout the United States. The company developed, built, and operated power plants and pipelines while dealing with rules of law and other infrastructures worldwide. Enron owned a large network of natural gas pipelines which stretched ocean to ocean and border to border including Northern Natural Gas, Florida Gas Transmission, Transwestern Pipeline company and a partnership in Northern Border Pipeline from Canada. In 1998, Enron moved into the water sector, creating the Azurix Corporation, which it part-floated on the New York Stock Exchange in June 1999. Azurix failed to break into the water utility market, and one of its major concessions, in Buenos Aires, was a large-scale money-loser. After the move to Houston, many analysts criticized the Enron management as swimming in debt. The Enron management pursued aggressive retribution against its critics, setting the pattern for dealing with accountants, lawyers and the financial media.
Enron grew wealthy due largely to marketing, promoting power and its high stock price. Enron was named "America's Most Innovative Company" by Fortune magazine for six consecutive years, from 1996 to 2001. It was on the Fortune ' s "100 Best Companies to Work for in America" list in 2000, and had offices that were stunning in their opulence. Enron was hailed by many, including labor and the workforce, as an overall great company, praised for its large long-term pensions, benefits for its workers and extremely effective management until its exposure in corporate fraud. The first analyst to publicly disclose Enron's financial flaws was Daniel Scotto, who in August 2001 issued a report entitled "All Stressed up and no place to go" which encouraged investors to sell Enron stocks and bonds at any and all costs.
As was later discovered, many of Enron's recorded assets and profits were inflated, or even wholly fraudulent and nonexistent. Debts and losses were put into entities formed "offshore" that were not included in the firm's financial statements, and other sophisticated and arcane financial transactions between Enron and related companies were used to take unprofitable entities off the company's books.
Its most valuable asset and the largest source of honest income, the 1930s-era Northern Natural Gas, was eventually purchased back by a group of Omaha investors, who moved its headquarters back to Omaha, and is now a unit of Warren Buffett's Mid-American Energy Holdings Corp. NNG was put up as collateral for a $2.5 billion capital infusion by Dynegy Corporation when Dynegy was planning to buy Enron. When Dynegy looked closely at Enron's books, they backed out of the deal and fired their CEO, Chuck Watson. The new chairman and head CEO, the late Daniel Dienstbier, had been president of NNG and an Enron executive at one time and an acquaintance of Warren Buffett. NNG continues to be profitable today.
Former Management and Corporate Governance
- Central Management
- Kenneth Lay: Founder, Chairman, and Chief Executive Officer
- Jeffrey Skilling: President, Chief Operating Officer, and CEO (February-August 2001)
- Andrew Fastow: Chief Financial Officer
- Rick Causey: Chief Accounting Officer
- Rebecca Mark-Jusbasche: CEO of Enron International and Azurix
- Lou Pai: CEO of Enron Energy Services
- Forest Hoglund: CEO of Enron Oil and Gas
- Richard Gallagher: Head of Enron Wholesale Global International Group
- Kenneth "Ken" Rice: CEO of Enron Wholesale and Enron Broadband Services
- Clifford Baxter: CEO of Enron North America
- Sherron Watkins: Head of Enron Global Finance
- Jim Derrick: Enron General Counsel
- Mark Koenig: Head of Enron Investor Relations
- Cindy Olson: Head of Enron Human Resources
- Greg Whally: President and COO of Enron (August 2001- Bankruptcy)
- Jeff McMahon: CFO of Enron (October 2001-Bankruptcy)
- Board Of Directors
- Robert A. Belfer: Chairman, Belco Oil and Gas Corp
- Norman P. Blake Jr.: Chairman, President and CEO, Comdisco, Inc.
- Ronnie C. Chan: Chairman, Hang Lung Group
- John H. Duncan: Former Chairman of The Executive Gulf and Western Industries Inc.
- Wendy L. Gramm: Former Chairman of US Commodity Futures Trading Commission
- Ken L. Harrison: Former Chairman and CEO of Portland General Electric
- Robert K. Jaedicke: Professor of Accounting at Emeritus
- Charles A. LeMaistre: President Emeritus, University of Texas M.D. Anderson Cancer Center
- John Mendelsohn: President, University of Texas M.D. Anderson Cancer Center
- Jerome J. Meyer: Chairman, Tektronix
- Paulo V. Ferraz Pereira: Executive Vice President if Group Bozano
- Frank Savage: Chairman: Alliance Capital Management
- John A. Urquhart: Senior Advisor to the Chairman of Enron
- John Wakeham: Former U.K. Secretary of State for Energy
- Herbert S. Winokur Jr.: President of Winokur Holdings Inc.
Products
Enron traded in more than 30 different products, including the following:
- Products traded on EnronOnline
- Petrochemicals
- Plastics
- Power
- Pulp and paper
- Steel
- Weather Risk Management
- Oil & LNG Transportation
- Broadband
- Principal Investments
- Risk Management for Commodities
- Shipping / Freight
- Streaming Media
- Water & Wastewater
It was also an extensive futures trader, including sugar, coffee, grains, hog, and other meat futures. At the time of its bankruptcy filing in December 2001, Enron structured into seven distinct business units.
Online marketplace services
- EnronOnline (commodity trading platform)
- ClickPaper (transaction platform for pulp, paper, and wood products)
- EnronCredit (the first global online credit department to provide live credit prices and enable business-to-business customers to hedge credit exposure instantly via the Internet.)
- ePowerOnline
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