The Enron Scandal and the Sarbanes Oxley Act Essay Example

unwilling to guarantee prices at the current low levels, Skilling still promised to establish a fixed gas price of $2.50 per thousand cubic feet from the Texaco pipeline they were already using. Enron would cover any rise in prices, but if prices stayed the same or dropped, Enron would make a profit.

Enron acquires Wessex Water for $2.2 billion in 1998, establishing it as the foundation of Enron's water division. In 1999, Enron introduces EnronOnline, the first online platform for trading commodities worldwide.

At the beginning of the 2000s, Kenneth Lay becomes Enron Chairman as the company's shares hit a historic peak of $90.56. In the following year, Skilling is named Enron's CEO. But after just six months, Skilling unexpectedly steps down for personal reasons. Lay subsequently takes back his position as Chief Executive.

On August 15th, 2001, Sherron Watkins, a Vice President at Enron, sent Lay a memo warning about the questionable accounting practices that would ultimately cause the company to collapse. The memo was sent anonymously but accurately predicted the outcome of the accounting scandals that unfolded.

Enron's collapse resulted from its use of fraudulent accounting techniques. Despite being the seventh-largest company in the United States, Enron played a crucial role in advancing power, communications, and weather securities.

Despite its impressive achievements, the company will always be remembered as a notable example of corporate fraud in America. Fortune Magazine recognized it as America's Most Innovative Company for five years in a row and included it on their list of the 100 Best Companies to Work for in America in 2000. However, they ultimately faced downfall due to a

scandal.

Rumors of bribery and political pressure started to emerge, affecting contracts in Central and South America, Africa, and the Philippines, particularly the $30 billion Indian MSEB contract. There were suspicions that Enron had utilized political connections to exert influence on the board. Additionally, questionable accounting practices further exacerbated these issues.

The company's bankruptcy in mid-November 2001 was caused by irregular accounting procedures done in conjunction with its accounting firm, Arthur Anderson. The value of Enron investors' equity per share dropped drastically from $85 to just 30 cents, resulting in a significant decline in the blue chip stocks' value.