Enron Documentary

What was Enron’s slogan

“Ask Why”

What accounting method did Enron use to manipulate its finances?

Mark-to-market accounting, which allowed them to book potential future profits the day a deal was signed, regardless of actual cash flow. SEC approved this and Jeff Skilling would only be with Enron if it was used.

Who was Jeffrey Skilling, and what was his role at Enron?

Enron's President and CEO. He believed in Darwinian "survival of the fittest" and used mark-to-market accounting to project profits. He converted $66 million in stock before the collapse.

Claimed to be risk-averse but was a big risk-taker.

What was Cliff Baxter's role, and what happened to him?

A close friend of Skilling and key deal-maker at Enron. He was a manic-depressive who felt deep remorse for the scandal, famously saying, "They're calling us child molesters, and that will never wash off." He committed suicide.

What were Andrew Fastow's contributions to Enron’s collapse?

As CFO, he masterminded "structured finance," creating hundreds of special entities (like LJM) to hide Enron's $30 billion debt. Fastow personally profited $45 million from these schemes.

Called out John Olson (skeptical analyst) and pressured Merrill Lynch to fire him.

Who was Ken Lay, and what was his background?

Chairman/CEO and founder of Enron. He pushed for deregulation in energy markets and ignored warnings of the company’s decline. He sold $300 million in stock before the collapse.

What was Amanda Martin's significance at Enron?

An attorney and one of the first executives Skilling hired. She was part of his inner circle.

What significant deal inflated Enron’s stock price but never worked?

The Blockbuster deal for video-on-demand, which failed technically. Enron still booked $53 million in projected earnings using mark-to-market accounting.

ALSO they attempted to create market fir trading weather risks but it didnt work.

What happened to Enron employees and retirees?

20,000 employees lost their jobs, and $2 billion in retirement savings disappeared.

What led to public skepticism about Enron?

Bethany McLean, a Fortune Magazine reporter, asked, "How exactly does Enron make its money?" Her questions led to increased scrutiny of the company's finances.

Skilling tried bullying her into silence and CFO Fastow admitted he just didn’t want to look bad.

What was Enron’s strategy for maintaining stock prices?

"Pump and dump" – artificially inflating stock prices through deceptive practices and selling off shares for personal profit.

What was the Performance Review Committee (PRC) introduced by Skilling?

A ranking system where employees were graded 1-5, with the bottom 10% (ranked 5) fired annually.

What was Enron's impact on deregulation?

Enron used deregulated markets to speculate in natural gas and electricity, ultimately leading to energy crises and market manipulation.

How did Andrew Fastow use LJM funds to manipulate finances?

LJM was used to hide Enron’s debt and inflate stock prices. Fastow had conflicts of interest as he managed both Enron’s finances and LJM funds.

How were banks complicit in Enron’s collapse?

Banks like Merrill Lynch participated in deceptive practices, such as pretending to purchase Nigerian power barges to temporarily remove debt from Enron’s books.

What was Arthur Andersen’s role?

Enron's accounting firm, Arthur Andersen, signed off on fraudulent financial reports and earned $1 million weekly for consulting fees.

How did Jeffrey Skilling view the workplace culture at Enron?

He fostered a cutthroat "survival of the fittest" environment and preferred employees he called "guys with spikes," valuing aggression and risk-taking.

What unethical practices were Wall Street analysts involved in?

Many analysts held Enron shares and accepted bonuses tied to investment banking deals, leading to biased evaluations of the company.

How did Jeffrey Skilling justify his actions?

He claimed, "I didn’t do anything wrong...I acted in the interest of shareholders."

How did investigators uncover Enron’s deceit?

Jim Chanos of Kynikos Associates noticed inconsistencies in Enron’s numbers and tipped off Bethany McLean.

How did the Sarbanes-Oxley Act of 2002 address Enron’s practices?

It improved corporate governance and financial transparency but didn’t address conflicts of interest in investment banking.

Who was John Olson?

• Fired for skepticism about Enron.

• Fastow pressured Merrill Lynch to fire him, and they later received lucrative deals.

Who is Jim Chanos?

• Noticed anomalies in financial statements.

• Alerted Fortune journalist Bethany McLean.

What suspicious thing did Enron do during investigations?

Shredding Documents: Enron destroyed incriminating evidence during investigations.