Enron

[VoodooAce]

Awful lot of nothing being said on the subject.

I just watched a very heartbreaking piece on a 50+ year old female employee that's had her entire financial future ripped out from under her by these greedy thieves.

Personally, I doubt there was any direct wrong doing by the Government or the Republican party. I do think the way it went down, however, is indicative of the attitude that party has when talking about big business and the rights and needs of those employed by them.

Still, as far back as the GOP primaries, Dubya's name has been solidly linked to Enron. They may have made donations to many, many politicians, but they were Dubya's biggest financial backer, and they gave more money to him than they did to anybody else. Kenneth Lay is a 'close' personal friend of his.

The argument that they donate to both parties is stupid because EVERYBODY donates to candidates from both parties.....even the NRA...so that argument holds no water.

I DO think it's ridiculous that the Bush justice department is investigating Bush's largest financial supporter and personal friend. The guys at the top, and those that have worked to hide, suppress and destroy information, deserve to be found out and exposed to the world for their lack of regard for the 'peasants', i.e. their loyal employees.

Bush is probably guilty of no more than having very slimy friends.

 

[Lefty Scaevola]

Oil companies going broke are not rare news in Texas, it is a high risk business. ENRON's fall seems to have come not from its new type business, commonditites trading in energy, but mostly through it stakes in old style oil and gas production partnerships. Who ever was manging the 401Ks may have been within federal law regading diversification, but they certainly would not a a prudent invester test in Texas when loading up so much in the stock of their own company exposed in such a high risk business. Federal pesion law likely preempts state law and common law in this area, leaving little remideis to the pesion owners except those provide in the federal law. The most clear securities violation I have evidence of so far is falsely manipulating, through straw men, the percentage of ENRON ownerhsip & control of some of these partnership to reduce their apparent percentage belown that where they would have had to cosolidate reporting and include the partneships' bad numbers into their own. I can not comment on the auditor situation yet without some more information.

 

[amadeus]

I wouldn't hold the government accountable for what happened at Enron, however, I'm glad that Ashcroft is staying out of it -- I just think a lot of environmentalist groups, animal 'rights' activists, etc, would accuse Ashcroft of siding with Enron's executive board.

Being a very conservative Republican, this doesn't mean that I'm going to whisk off what happened at Enron, and I commend Senator Lieberman (D-CT) for his probe into what happened. Right now, it doesn't look that great for the Enron folks.

 

[DinoDoc]

Originally posted by rmsharpe
I just think a lot of environmentalist groups, animal 'rights' activists, etc, would accuse Ashcroft of siding with Enron's executive board.

He would have good company then: http://www.climateark.org/articles/2001/4th/anentale.htm .

 

[Magnus]

I am hearing rumours now that some pretty big players got tipped off to remove their stock before it crashed... ahh the evils of unchecked capitalism.

 

[DinoDoc]

Originally posted by Magnus
ahh the evils of unchecked capitalism.

You mean insider trading, don't you? They are two different things after all.

 

[knowltok3]

I had heard that many of the accounting records were mysteriously destroyed by the accounting firm (Aurthor Anderson I think, but don't quote me). This is extremely troubling from a wider perspective. The investing community puts a lot of trust in the big 5 accounting firms to provide accurate data on companies so that they can accurately value the stock. If this trust is found to be misplaced it makes things a lot riskier and thus could drive down the values of many stocks as people have new uncertainties. The idea is that you are supposed to be able to see these things coming. Companies aren't supposed to be able to hide losses and poor performance. If they are able to, and if they relatively get away with it, it will cast a shadow over the entire financial system.

Put another way, you have faith that GM is solid because the paper and your broker say so. They get their info from the reporting firms like Dunn & Bradstreet. And they in turn get their info from the accounting records done by the accountants and made public by law. Now cast doubt on the accountants....

 

[VoodooAce]

One thing I'm worried about is the possibility that we will all know there are guilty parties out there that knowingly screwed hundreds of people out of their lives and won't be able to prove any of it.

I just don't want to see these people walk.

 

[Simon Darkshade]

"One thing I'm worried about is the possibility that we will all know there are guilty parties out there that knowingly screwed hundreds of people out of their lives and won't be able to prove any of it.

I just don't want to see these people walk."

I concur completely. Too many of these corporate crims get away scott free with destroying peoples lives and money. I don't know specifically what should be done, but it needs to be more than the moment.

 

[knowltok3]

I too fully agree with that sentiment. I think penalties for this sort of thing should be extremely severe. The people that commit these crimes are fully aware that what they are doing is wrong, will hurt thousands of people directlyand in great measure, and have not even the slightest excuse of lack of opportunity, or need to provide, or anything like that.

If memory serves it was the Aztecs who held those of higher office to a higher standard and stiffer penalties. I am not saying this would work and or help, but I think white collar crime is a place where extremely hash penalties can be effective. None of these people are irrational enough not to care about consequences like a murderer or a rapist. They wheigh cost and benefit. Currently in the cost side they see only the possibility of a few years in the Federal country club. Perhaps 20 years doing hard time in Levenworth would make some of them think twice.

 

[tetley]

Having managed my own stocks for quite some time, I've seen all kinds of Enron's come and go, and you never hear about it. Just right now I've got a letter on my desk asking me to join a class action lawsuit against Unisys.

The rise and fall of Enron is nothing new, or even isolated. What's significant about this one is just that it's so large, and the government connections to it. Quite frankly, given the magnitude of Enron's political lobbying activities, I think it's a great testimony to the integrity and character of the U.S.' Executive Branch officials that this isn't worse than it is. I mean, allegations that the Cabinet engaged in insider trading--that would make Watergate look like a wet firecracker.

 

[VoodooAce]

Yup.

The fact is Duh-bya and his admin had to maintain a further distance from them than most anybody else would since his name was so linked to Enron. There was no chance we were going to have a Chrysler-like bail out.

Just bad luck for him that they gave more money to him than anybody else and that he got more money from them than he did from anybody else.

Also, while we've all seen Enrons come and go, I don't think we've ever seen a bankruptcy this large, have we?

 

[knowltok3]

I don't know about the size of the bankruptcy, but I did read that Anderson let go their lead accountant over this. If he's guilty public flogging isn't enough. It's one thing for a company to go bankrupt, even somewhat suddenly. It is quite another for financial difficulties to be covered up by an accountant. As I've stated earlier, the financial community puts its faith in the financial statements those accountants put out.

 

[Knight-Dragon]

What it amounts to is that the audit of Enron by AA failed to uncover all these gross accounting 'defects'. Which shldn't be. And also cos Enron lobbied hard and cosied up with the relevant establishment ppl to lighten up all those regulations that're supposed to regulate it.

There's also a matter of conflict of interest as AA was also providing consulting services to Enron IIRC, which was worth a lot more to AA. Auditing is really a sunset industry and the Big 5 firms usually got more income fr their consulting and other service provider units. It won't make sense for them to pronounce that their clients are doing bad accounting and then lose all their consulting business.

 

[Knight-Dragon]

Originally posted by knowltok3
I don't know about the size of the bankruptcy, but I did read that Anderson let go their lead accountant over this. If he's guilty public flogging isn't enough. It's one thing for a company to go bankrupt, even somewhat suddenly. It is quite another for financial difficulties to be covered up by an accountant. As I've stated earlier, the financial community puts its faith in the financial statements those accountants put out.

No, AA fired the partner who was in charge of the audit and also put on leave a few other partners (who're involved). They were trying to do damage control. It'd nothing to do with the accountants within Enron.

Basically, financial statements go like these. The accountants of that co will draw up the profit & loss statement and the balance sheet (most important) and other statements and then the auditors will come in to audit those statements. The auditors will query, do statistical 'tests' and so on to ensure financial integrity of the reports. Then the auditors will sign off on the accounts and the co can go ahead to publish them.

In Enron's case, the co accountants went into some creative accounting for those special partnerships and overreported P/L for the past few yrs. And the auditors missed (somehow) out on those. Although this might be hard to believe, it might just be possible esp if the co under audit had millions of transactions of every nature. Given the time constraints auditors worked with, they could fail to detect such stuff. Easily.

However in this case, AA was actually destroying their audit records so I think they probably were hiding something.

 

[knowltok3]

However in this case, AA was actually destroying their audit records so I think they probably were hiding something.

This is my point. The investing public puts its faith in the auditing accountants, not the company ones. We know that an individual company might try to pull a fast one, but we rely on the auditors to keep them honest. I wasn't clear when I used the term accountants as to who I was refering to. My mistake.

 

[Lefty Scaevola]

As to the relative integrity of cabinet officials, one the of significants lobbying Treas. Sec O'Neil to take actions he deemed inappropriate to shore up ENRON's bond rating, was Clinton's Treas Sec, Mr Rubin.

 

[VoodooAce]

oooohh...Lol

Too funny, Lefty.

 

[VoodooAce]

However in this case, AA was actually destroying their audit records so I think they probably were hiding something. [/B]

You get that feeling, don't you.

Wonder if they hired Ollie North as a consultant.

They didn't start shredding, it seems, until they found out the gov't was going to come looking for it.

Too many people involved, I think, for it not to all come out in the wash. We'll see.

 

[Knight-Dragon]

Originally posted by VoodooAce
They didn't start shredding, it seems, until they found out the gov't was going to come looking for it.

I think it's when the SEC announced they're going to investigate that the AA partner sent out the memo to begin shredding everything except their basic audit working papers IIRC. And I think that's pretty dumb. Might as well announce you're guilty as hell.

I think the audit industry is going to be in for a very bad time.