Enron

Early Years to Bankruptcy

In its early years, the newly merged Enron faced a tremendous amount of debt and teetered on the verge of bankruptcy. The CEO at that time, Richard Kinder, emphasized accuracy in cash management, and would hold weekly meetings with business unit leaders to challenge their reported numbers. While he pushed for excellence, he did not accept unrealistic goals and would question overly optimistic proposals. Business was important, but he respected his employees and was described as people-oriented.

The appointment of Jeffrey Skilling as chief operating officer (COO) and later CEO marked the beginning of a new culture. Deregulation allowed Enron to break from the old system, be innovative, and become a leader in the industry. Executives seized upon this opportunity and encouraged aggressiveness and independence. Enron's contracts became increasingly diverse and complex as the company started to see rapid growth. Through the use of specific accounting maneuvers, profits from long-term deals were immediately recorded, and short-term results were emphasized.

In order to keep growing and keep investors excited, Enron began to borrow money to invest in new projects. Because this would make Enron's earnings look less impressive, the company created partnerships to keep the resulting debt off of the books. Enron was able to hide hundreds of millions of dollars in debt through this practice, which made the company appear more profitable than it was. Enron also attracted big investors with promises of secret information about the company that was not made available to the public or government. Such secrecy violates laws in place to protect all investors by ensuring that they have full access to accurate information about publicly traded companies.

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