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Nearly 5,000 employees lost their jobs with no severance pay or medical insurance, and far too many of Enron's employees also had all their retirement monies invested in Enron, losing not only their jobs but also their retirement savings. Certainly, Enron was not a ticking time bomb from its beginning; in fact, the company started life in 1985 as a merger of two large U. regulated gas pipeline companies that had been in existence for decades.
One of Enron's early mission statements was "to become the premier natural gas pipeline company in North America," a laudable, non-arrogant goal.
Harvard University did a case study; Business Week, Forbes and Fortune routinely covered the company in a favorable light.
In fact, Fortune named Enron the most innovative company in America for six years in row, beginning in 1996. You've said that Ken Lay would force all Enron employees to book corporate travel through his sister's travel agency even though it was more expensive than more competent agencies.
[Arthur Andersen was Enron's external auditor.] In the end, both companies put revenues and earnings above all else -- the means by which those earnings were generated did not matter. Ken Lay was well known for his charitable giving and his verbal commitment to Enron's four core values -- respect, integrity, communication, and excellence -- but he was not quite walking the walk. Trouble was that it was neither low cost nor good service.
Domestically, you could manage, but when it came to international travel -- that agency was very nearly incompetent.
Nearly 5,000 were called to a massive meeting and told that the paychecks that they had recently received would be their last. In August of that year, Sherron Watkins, an Enron vice president, had sent an anonymous memo to Lay that read, "I am incredibly nervous that we will implode in a wave of accounting scandals." Of course, that's exactly what happened. (After sending the memos, she had met with Lay with no results.) Watkins was soon lauded as an "internal whistle-blower," brought before Congressional and Senate hearings to testify against her former bosses, and heralded by TIME magazine as a "Person of the Year," with World Com's Cynthia Cooper and the FBI's Coleen Rowley.
CEO Ken Lay had left a voice mail on the phones of all Enron employees asking they come into the office regardless. Congress discovered Watkins' memos to Lay and other top executives.
I must conclude that their judgment was severely clouded by the fees they received as directors.How in the world did a qualified and talented independent board of directors waive Enron's code of conduct twice, to allow Fastow, to form and run an investment partnership [named LJM] which for the most part did nothing but buy, sell, and hedge assets with Enron?Enron had allowed Andy Fastow to enter into an unprecedented conflict of interest.It collapsed into bankruptcy without ever reporting a losing quarter.More than billion of shareholder investments became worthless; Enron owed billion to its creditors, 20,000 of them who will or have received on average, 14 to 25 cents on the dollar. But the scary part is that the breakdown was not done by outright intention but more by small steps in the wrong direction.