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Sir. Captain Munawwar Ahmad
Shajiah Ali (01-120091-066) MBA-4(b)
This falsely valued stock was bought in huge amounts by Enron¶s very own employees. false reporting of revenue. The Stock Market was also highly influenced by the Enron scandal. many employees had their entire pensions invested in Enron stock. alleged crimes. A number of people and firms were involved in this scandal which were y Arthur Anderson involvement. the crash of Enron¶s stock sent out a loud message to all stock investors that it was extremely important to take a . Skilling and others led to the collapse of the company due to fraud.ENRON Corporation Scandal In 2001. United States was shocked by the collapse of Enron. did not ask any questions about how the stock was growing so quickly in value or what would happen when the price fell. thereby hiding huge amounts of debt and artificially inflating stock prices beyond the point of no return y Enron with the help of government resources was able to wreak a great deal of havoc in an incredibly short period of time which was not limited to the unites states only but also extended to other nations and continents Enron¶s stock values nearly doubled in one year through illegal and unethical activities. In the year 2001 the conspiracy of Lay. Most obvious is the loss of employment for thousands of highly skilled and well paid employees. When Enron crashed. Moreover. The major event that changed everything for Enron¶s employees was the collapse of the company in a hail of legal problems. the Enron¶s accounting firm which created false earning reports. After that the company also got involved in the trading of commodities and providing services and therefore its stock value increased over 50% in one year. Enron came to born as a result of a 1985 merger of two companies. who either on purpose or through deception. who were forced to try to find work elsewhere virtually overnight. shoddy accounting practices and a general disregard for virtually every tenet of business ethics. Many of these employees also had their life savings totally invested in Enron stock which was now worthless. a multibillion dollar corporation that employed thousands of people. Company took a huge amount of debt during its foundation and its CEO Kenneth Lay recruited the sharpest and shrewd businesspeople in his company one of them was Jeffrey Skilling. and finger pointing. employees were affected in several ways.
Second. in one way or another. At last count. it was estimated that the company's total assets had been inflated by around $11 billion. Ebbers wanted to cover the margin calls. WorldCom filed for Chapter 11 bankruptcy protection. (Edward Raver.closer look at the stocks that one already owned. The Enron Scandal: the Crime. the largest such filing in United States history. the telecommunications industry began to slow down and WorldCom's stock was declining. During 2001. and Controversy of the Century (Dec 15.8 billion of the fraud in June 2002. Beginning in 1999 and continuing through May 2002. WorldCom's accounting department underreported 'line costs' (interconnection expenses with other telecommunication companies) by capitalizing these costs on the balance sheet rather than properly expensing them. for better or for worse. Tragedy.S. WorldCom has yet to pay its creditors. as well as any that they were considering purchasing from that point forward. (JJ WorldCom Scandal: A Look Back at One of the Biggest Corporate Scandals in U. Then SEC launched an investigation and by the end of 2003. Scandal. It forced everyone to look at themselves and fully realize the consequences of reckless greed and the breakage of laws on a whim. 2002. History (March 8. the company inflated revenues with bogus accounting entries from 'corporate unallocated revenue accounts. and elsewhere. The scandal changed the lives of everyone in America. First.7 billion in debt. but this strategy ultimately failed. CEO Bernard Ebbers came under increasing pressure from banks to cover margin calls on his WorldCom stock that was used to finance his other businesses endeavors. The first discovery of possible illegal activity was by WorldCom's own internal audit department who uncovered approximately $3. 2007)) . The company emerged from Chapter 11 bankruptcy in 2004 with about $5. On July 21. Ebbers persuaded WorldCom's board of directors to provide him corporate loans and guarantees totaling more than $400 million. many of whom have waited years for the money owed. WorldCom used shady accounting methods to mask its declining financial condition by falsely professing financial growth and profitability to increase the price of WorldCom¶s stock The fraud was accomplished in two main ways. 2006)) WorldCom debacle In 1998.
the majority of the Tyco's employees committed no acts of fraud knowingly.stm) TYCO International Scandal Tyco manufactures a wide variety of products. disguised. Because the acts of fraud committed by former Tyco executives were concealed and. Formal charges were made by the SEC September 12. institutional and individual customers through the most extensive worldwide property-casualty .Fraud at Tyco International) American International Group (AIG) American International Group. AIG companies serve commercial. During 2002.000 people. 2002. had taken over $170 million in loans from Tyco without receiving appropriate approval from Tyco's compensation committee and notifying shareholders. Today Tyco continues its operations and has replaced many members of its board of directors successfully.co.uk/1/hi/business/4680221. (PEARSON Education. Tyco International. Mark Swartz. which resulted from earnings restatements and goodwill write-offs related to hundreds of Tyco acquisitions. The conglomerate operates in over a hundred countries around the world and employs 240. the company's chief legal officer.bbc. Tyco's former CEO. from electronic components to healthcare products. The collapse of Tyco's stock was in large part caused by a massive $9 billion loss for the 2002 fiscal year. For the most part these loans were taken with low to no interest.(http://news. Many of them were offset as bonuses without open approval. Kozlowski and Swartz also sold seven and a half million shares of Tyco stock for $430 million without telling investors. As investigations continued it was uncovered that Dennis Kozlowski. who saw the price of their stock decline from $60 to single digits in the summer of 2002. and Mark Belnick. Tyco's former CFO. (AIG) is a world leader in insurance and financial services and is the leading international insurance organization with operations in more than 130 countries and jurisdictions. Inc. the Securities and Exchange Commission began an investigation of Tyco's top executives. for the most part.
Life Insurance & Retirement Services. with regional headquarters in London and Tokyo. AIG has also lobbied Congress on extending free trade agreements with numerous countries. Other significant activities include Financial Services and Asset Management. routinely spent at least a quarter-million dollars each election cycle. as well as offices located throughout the world. drastic losses in its stock. Lehman. Lehman Brothers went bankrupt in 2008. Rozeff) (OpenSecrets. the firm filed for Chapter 11 bankruptcy protection following the massive exodus of most of its clients.S. While favoring Republican candidates for much of the 2000s. (SHVOONG.ironically. Treasury securities market. including China. Financial Services and Asset Management It was one of the financial companies to receive billions of dollars in taxpayer money to help it stay afloat in 2008 and 2009. 2008. It was a primary dealer in the U. Until it went bankrupt. one of the most notable victims of the nation's mortgage crisis and economic downturn of the late 2000s. history The bank Barclays acquired a significant portion of Lehman in late 2008. AIG's primary activities include both General Insurance and Life Insurance & Retirement Services operations. The filing marked the largest bankruptcy in U. After the terrorism attacks of September 11. and devaluation of its assets by credit rating agencies. AIG asked Congress to pass legislation that would help pay for any insurance claims resulting from future terrorist attacks. the company's PAC swung sharply toward Democrats during the 2008 election cycle -. a cycle in which it spent more money through its PAC than in any previous. India and Chile. through its political action committee. AIG's major product and service groupings are General Insurance.com-Lehman Brothers) .S.org-AIG) Lehman Brothers After decades operating as a major financial services firm. The firm's worldwide headquarters were in New York City. (The AIG Story: A Brief Introduction -by Michael S.and life insurance networks of any insurer. On September 15. but was criticized heavily for using some of that money to pay out bonuses to employees.
Goldman Sachs advises and invests in nearly every industry affected by federal legislation. In 2000. Like others in the securities industry.500 people with additional offices in major international financial centers. which renamed itself "Andersen" and rebuilt a consulting group of 15. and Asset Management and Securities Services. was also among the many banks in 2008 and 2009 to receive billions of dollars in taxpayer money to help it stay afloat. Goldman Sachs. tax and consulting practices were separated and sold to various competitors' firms. Arthur Andersen split from Andersen Consulting. and Andersen Consulting became an industry leader. The firm quickly became known for an uncompromising adherence to accounting principles. providing audit.000 professionals. one of Wall Street¶s most prestigious investment banks. (Laurie Phillips.Arthur Anderson Andersen LLP was the largest Big Five public accounting firm. Andersen was convicted in 2002 of one count of obstruction of justice because of its role in auditing Enron. Arthur Andersen was 28 when he started the firm in 1913. the conviction was overturned by the Supreme Court in a unanimous vote. auditing and tax services. the audit. Goldman Sachs was founded in 1869 and is headquartered in New York City. After the conviction. and employs 32. In 2005. the firm could no longer provide public accounting services. The firm dissolved because of legal issues arising from a series of client financial misstatements. trade and nearly . The firm closely monitors issues including economic policy. The firm added consulting services in 1954 to help audit clients set up their computer systems. After the conviction. eHow Contributor -The History of the Arthur Andersen Accounting Firm) Goldman Sachs Goldman Sachs is a leading global investment banking and securities firm with three principal business lines: y y y Investment Banking Trading and Principal Investments. tax and consulting services in 84 countries. offering accounting.
Australia. Their offerings span business and technology consulting. systems. independent testing and validation services. Tata Group comprises more than 90 companies with activities ranging from manufacturing and chemicals to consumer products and business services. custom software development. (Infosys Building Tomorrow¶s Enterprise) Tata group The Tata Group is India's largest conglomerate company. Infosys defines designs and delivers technology-enabled business solutions for Global 2000 companies. A number of high-ranking government officials in recent years have spent part of their careers at Goldman Sachs. IT infrastructure services and business process outsourcing. The firm tends to give most of its money to Democrats. Its Tata Steel unit is India's largest private steelmaker. It has been a major proponent of privatizing Social Security as well as legislation that would essentially deregulate the investment banking/securities industry. Infosys and its subsidiaries have 127. Over 97% of our revenues come from existing customers. (NASDAQ: INFY) was started in 1981 by seven people with US$ 250. with revenues equivalent of about 3. Today. product engineering. 2010.7 billion. the UK.org-Goldman Sachs) Infosys Infosys Technologies Ltd. services.all legislation that governs the financial sector. re-engineering. the Czech Republic. Infosys has a global footprint with 65 offices and 59 development centers in India. it is a global leader in the "next generation" of IT and consulting with revenues of US$ 5. maintenance. China. while Tata Power is the nation's largest private . (OpenSecrets.2% of India's GDP. Infosys takes pride in building strategic long-term client relationships. Canada and Japan.779 employees as on December 31. Infosys pioneered the Global Delivery Model (GDM). Infosys also provides a complete range of services by leveraging their domain and business expertise and strategic alliances with leading technology providers. which emerged as a disruptive force in the industry leading to the rise of offshore outsourcing. Poland.
and related services. research.300 customer accounts at some 2. and publishes market-leading credit opinions. serving more than 9. (Hoovers-Tata Group of companies) Moody¶s. delivery methods in Internet. Web services. corporate.8% of the ownership of Tata Group is held by the charitable trust of Tata. partners. Tata Consultancy Services and Tata Global Beverages . The group takes the name of its founder.com) y Fitch Fitch Group. 65. research and risk analysis. The Tata Group has operations in more than 85 countries across six continents and its companies export products and services to 80 nations. protecting the integrity of credit. is a rating agency which provides credit opinions. and RSS areas. deal research and commentary. R. Tata Motors makes the world's most inexpensive car. The current chairman of the Tata group is Ratan Tata. who took over from J. 27 are publicly listed enterprises. Each of them is explained below y Moody¶s Moody's Investors Service is among the world¶s most respected and widely utilized sources for credit ratings. Moody¶s provides research data and analytic tools for assessing credit risk. and tools and models in the areas of market implied . The company focuses on the development of fixed income products and services. Inc. The company is currently in its fifth generation of family stewardship. data feeds. D. Moody's Investor Service and Fitch Ratings are the Big Three credit rating agencies. and financial data. Out of 98 operating companies in seven business sectors.400 institutions around the globe. In addition to our core ratings business. Fitch and Standard and Poor¶s Standard & Poor's. as well as on the credit. (Moody¶s. It offers credit ratings. Tata Group is managed through holding company Tata Sons. Other units include Tata Communications. Jamsedji Tata. Moody¶s commitment and expertise contribute to stable. a member of whose family has almost variably been the chairman of the group.power utility. transparent and integrated financial markets. analytics. Tata in 1991. and structured finance programs.
credit risk management. offers enterprise risk management services in Toronto.ratings. the United Kingdom.. with ratings on approximately US$32 trillion of debt issued in 100+ countries. Inc. financial institutions. (Bloomberg Business week-Fitch Group. Ins. insurance companies. It is a global leader in credit ratings and credit risk analysis. through its subsidiaries. Fitch Group. indices. and structured credit. exchanges. The company was founded in 1913 and is headquartered in New York. brokerage firms. Canada. It is one of the Big Three credit rating agencies (Standard & Poor¶s Home page) . Standard & Poor¶s credit ratings. The company also provides credit and corporate finance training programs for professionals working in fixed income. and regulators. Inc. investment research and data provide financial decision-makers with the information and opinions they need to feel confident about their decisions It is a division of The McGraw-Hill Companies that publishes financial research and analysis on stocks and bonds. New York with an additional office in London. corporates. sovereigns. structured finance. and origination/relationship management. Fitch Group. The company serves financial institutions.) y Standard and Poor¶s Standard & Poor's (S&P) is a United States-based financial services company. was formerly known as Fitch Ratings and changed its name in January 2005. investment and commercial banks. fund management firms.
Global financial crisis and its effect on Pakistan .
Pakistan is one of the most prominent examples of a nation where economic pressures are feeding unrest and threatening a wobbly government The global financial crisis is likely to affect Pakistan in two ways.Introduction The financial crisis that has spanned the globe has had an especially strong impact in countries beset by political uncertainty. Mr. By analyzing the economic trends in Pakistan. other reasons which may work as a bulwark for Pakistan against such odds. the system of mortgage banking is still in infancy in Pakistan. directly and indirectly. There are however. we see that despite an impressive growth rate of more than 6% over the last 6 years( 2001 to 2007). So far the impact of global financial crisis has not been felt in Pakistan as a separate crisis as we are already facing the same for the last year. Analysts say weak governments saddled with poorly performing economies are more vulnerable to social unrest and armed insurgency. and despite of tall claims from the former Banker turned Prime Minister. is the sharp decline in oil and agricultural produce which has helped Pakistan to breathe a fresh. The global financial crisis is impacting the real and social sectors of developing countries through multiple channels. The argument is based on the premise that due to global crisis a trend in sharp decline in oil and food commodities prices have been witnessed and it will help Pakistan in cutting down its import bill which in turn help boost its foreign reserves. is less likely to be affected y Secondly. . According to some analysts this global crisis may help Pakistan in a short term to control depletion of foreign reserves. According to analysts. Pakistan faced a major challenge in shape of energy shortage and food inflation. the banks largely operate in loaning against business y Thirdly. Shaukat Aziz. Pakistan¶s economy could not exhibit resilience to face the economic challenges of the last year when the oil and food prices experience a sudden upward trend. y First and foremost is that Pakistan¶s economy is not fully integrated with the world¶s economy and therefore.
by the real sectors of the economy. Less developed linkages with international markets have meant that the direct impact of the financial crisis has not been felt by the Pakistani financial sector.rice. with a slowdown in global demand and fall in commodity prices having varying effects. Pakistan largely depends on exports of cotton and textile related items. effects of the crisis have been felt. diversity in exports items.some years of good growth and some not. There is a strong likely hood that this single largest source of foreign exchange may come under stress. finding new markets and progress in high technology.Pakistan¶s financial state has always shown mixed results. Impact of the Global Crisis on Pakistan¶s Economy The developing nature of the financial sector has been a saving grace for the Pakistani economy.the efforts and resources required for war against terror would diminish. The logical consequence would be that Pakistan again will face and bear the brunt of this volatile situation alone as it happened at the time of Soviet with drawl from Afghanistan in 80s. Pakistan¶s economic base is yet to be broadened with a focus on value added products. the capital account. The indirect consequence would be that Pakistan¶s exports will suffer as imports of the economies in recession will fall and possibility of slashing of funds from ongoing foreign funded projects can not also be ruled out. Another outcome is most likely to happen. This financial crisis will have a significant impact on the size of remittances which Pakistan receives from the Europe and the US. While the domestic environment was . sports goods. with a significant reduction in private inflows to Pakistan. there will be long-term direct and indirect consequences. Even though Pakistan may escape the immediate negative implications of the global recession. due to a confluence of factors emanating from both the domestic and international economic and financial developments. chemicals and manufacturing items also contribute to exports. Of the directs. The effects of the global slowdown have been transmitted through the trade balance. the foreign investments and bilateral assistance are on the top. Another big source of foreign earnings is remittances received from the Pakistanis expatriates. even though in a limited manner. Financial Sector The operating environment of the financial sector experienced significant deterioration in 2007 and 2008. However.
a proactive and vigilant regulatory environment. Pakistan. increasing but still relatively less correlation of domestic financial markets with global financial developments. United Kingdom.32 billion in the corresponding period last year. Most of this decrease has come in the shape of an outflow of private portfolio investment of US$ 1 billion.characterized by weakening macroeconomic indicators and the uncertainty caused by the prolonged period of political transition. Pakistan has witnessed a slowdown in exports. which remained largely unscathed from a direct impact of the crisis. Commodity Prices & Trade An unprecedented hike in international commodity prices wreaked havoc on Pakistan¶s external sector during 2007-08. decreasing the current account deficit. thereby displaying a rise of 19. and Hong Kong. which have been at the apex of the international crisis. Capital Flows & Workers¶ Remittances A beleaguered international economic environment has held back Foreign Investment as it posted a decline of 47. has been more concerned with issues relating to monetary stability due to rising inflation since before the advent of the crisis.5 percent. A key loss to developing countries during the current crisis has been a decrease in exports as demand from advanced economies contracts. the global financial crisis and the commodity price hike had a feedback impact on the financial sector through the real sector of the economy. with the current account widening significantly. but this . However. no direct exposure to securitized instruments. workers¶ remittances to Pakistan remained vigorous and unaffected by the crisis. risks to financial stability were largely contained and well managed as the crisis unfolded and impacted the financial sectors in advanced economies. has dropped significantly. increasingly resilient to a wide variety of shocks. in the wake of a reduction in global demand and the resultant decrease in commodity prices. the import bill has reduced significantly.36 billion in July-April 2008-09 as against US$ 5. Investment from countries such as the United States. Some Asian economies have witnessed an anticipated fall in workers¶ remittances as unemployment grew in advanced host economies. With a thriving banking sector.5 percent during the first ten months of 2008-09 compared to the corresponding period of the previous year. totaling US$ 6. However. and most importantly. Singapore.
while striving to re-establish domestic economic growth. Firstly. and removing inefficiencies which would allow productive sectors to function at optimal levels. Conclusion Pakistan faces a plethora of challenges that stem from both the domestic environment as well as the negative outlook of the global economy. efforts must be concentrated on increasing capacity of industry. An increasing cost of borrowing internationally. having a positive effect on the trade balance. In order to achieve an increase in production and the desired level of growth. the fall in exports is partly due to a fall in domestic productivity and it is hard to distinguish between the impact of the crisis and internal factors on exports. the fall in imports has outpaced the fall in exports. and external debt policies work in tandem to protect the sectors exposed to the international crisis. With regards to external financing. coupled with deterioration in the country¶s credit rating has ruled out issuance of government paper as a financing mechanism. if current conditions in international markets persist. monetary. but a few credible threats still remain. Pakistan¶s presence in the international capital markets in 2008-09 was limited to the repayment of Eurobond amounting to US$ 500 million made in February 2009 with no new issuance at the backdrop of financial crisis engulfing the global markets. 2009) . The World Bank Group-Impact of Global Financial Crisis on South Asia (February 17. It is vital that fiscal. a recent rally in international commodity prices as investors seek refuge could potentially reverse the gains registered in the current account balance. The future of workers¶ remittances is uncertain given the fact that employment in host countries is limited. The government should now focus on boosting economic activity and providing growth impetus. The impact of the global crisis has so far been very limited.reduction stands apart from that witnessed by other Asian economies for two reasons. External Financing The global crisis has restricted Pakistan¶s ability to tap international debt capital markets to raise funds. Secondly. The external sector still faces multiple threats in the form of a further reduction in international demand and secondly. the government will have to increase reliance on funding from multilateral and bilateral agencies.
Muhammad Saqib Aziz-Impact of Global Financial Crisis on Pakistan (The London summit 2010) Mohammed Mansoor Ali.Global Financial Crisis: Impact on Pakistan and Policy Response (July 2009) .
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