Enrontrial11yearslater

RememberingtheconvictionofJeffreySkillingandKenLay
By Michael Haddad Published 10:30 am, Thursday, April 26, 2017

Jeffrey Skilling(CEO), Ken Lay(Founder), and Andy Fastow(CFO)

Enron
It was on December 2nd 2001, that Houstons gemstone declared bankruptcy. Enron
was Houstons pride and joy in the 90s; Enron was seen as the Wall Street darling
and it made Houstonians proud. In the end, corporate greed and scandal was the
cause of their fall from grace.
Enron executives calmly took advantage of government loopholes to boost their
financial earnings and their stock price; Ultimately they paid the price in court.
However, the bigger conversation as a whole seems to be lawyers, law professors,
and some reporters criticizing the court cases of Enron, aiming their criticism at the
U.S. Governments handling of the trial.

One word, California- Tom White (Enron: The Smartest Guys in the Room)
So who thought the deregulation of energy would be a good idea? Governors Pete
Wilson and Steve Peace both led the charge for the deregulation of energy in
California, and succeeded in doing so. The two governors opened Pandoras Box,
ultimately letting Enron cause artificial power outages, therefore spiking the price of
energy.

You know what the difference is between the state of California and the Titanic?
This being a web cast, I know I'm going to regret this At least when the Titanic
went down, the lights were on. (Ken Lay)

Somehow, Enron still remained in the clear legally. Energy was declared a free
market so companies could, in theory, do what they please thanks to the
government. Enron definitely caused a panic situation for Californians. The
California Energy Crisis, according to the Public Policy Institute of California, cost
the state $40 billion to $45 billion or 3.5 percent of the total economy in California.

The attitude government officials had towards Enron could only be one that is very
negative after the energy crisis. Government officials did not forget what Enron did
during the trials of Skilling and Lay and due to this, a bias was present in the
courtroom.

Market-to-market accounting: Fair or Foul?

In a very general sense, market-to-market accounting legally let Enron hide losses
by reporting speculated future net earnings rather than present earnings, therefore
hiding any present depreciation in Enron stock value. The main point is the word
legally. How could the government approve of this method with so many loose
ends? Surely the government had to have known that Enron was taking advantage
of what was given to them.

Enron made a fool of the SEC and those involved in approving Enrons accounting
method, which is why they got so much backlash from the federal government
during their trials. Skilling was found guilty of crimes involving his company using a
federally approved accounting method.

Interestingly, the US Government grabbed mark to market accounting as a means

of showing that Skilling did not honestly report asset values and shows losses as
soon as they could be estimatedBut if Skilling thought the losses could be
avoided, then not recording the loss was reasonable. You can disagree but that
does not result in Skilling committing a crime. - Harold Bierman, Law and Business
Professor at Cornell
About the writer
Michael Haddad, 19 years old
Position: Intern/CEO
10 years with The Houston Chronicle
Harvard grad
2018 Winter Olympics (Says he will acquire gold in Ice Hockey)
Likes long walks on the beach, Travis Scott, netlfix, and his cat
Dislikes anything Dallas