Sheronda L Burrell
Professor Best
LEG100 Managers & the Legal Environment
October 26, 2010
Describe the somatic culture at Enron.
Enron was basically a company whos trading and risk management business strategy was create on assets largely owned by others. The complex fiscal manipulation and off- rest-sheet partnerships that former CEO Jeffrey K. Skilling and chief financial incumbent Andrew S. Fastow implemented were intended to remove everything from telecommunications fiber to water companies from the firms balance sheet and into partnerships. What distinguished Enrons partnerships from those commonly used to share risks were their deprivation of independence from Enron and the use of Enrons stock as collateral to leverage the partnerships. (Kadlec, 2002)
If Enrons stock fell in value, the firm was obligated to have sex more shares to the partnership to restore the value of the collateral profound the debt or immediately repay the debt. Lenders in effect had rule recourse to Enron stock if at any time the partnerships could non repay their loans in full. Rather than limiting risk, Enron was assuming keep down risk by guaranteeing the loans with its stock.
Discuss whether Enrons officers acted within the telescope of their authority.
Enron also engaged in transactions that inflated its earnings, much(prenominal) as selling time on its broadband scheme to a partnership at inflated prices at a time when the demand for broadband was plummeting. Enron then recorded a substantial profit on such transactions. The partnerships agreed to such transactions because Enron management seems to have exerted disproportionate influence in some instances over partnership decisions, although its ownership interests were very small, a good deal less than 3 percent. Curiously, Enrons outside auditor, Arthur Andersen, had a dual office staff in these partnerships, collecting fees for helping to set them up and auditing them.
At the time the firm filed for bankruptcy on...If you want to get a full essay, order it on our website: Ordercustompaper.com
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