What led to the fall of Enron?
Enron is synonymous with corruption and corporate fraud. On one hand Enron doled out huge sums of money to charity, but on the other hand it systematically defrauded its financial statements during the 1990s along with its accounting firm Arthur Anderson. Enron’s methods were creative and systematic. Its financial statements and accounting practices were not clear. For example, it had made it a practice of booking costs of cancelled projects as assets. The explanation was that there was no official letter stating that the project was cancelled! These things had “snow ball” effect. Also it had created special purpose offshore entities in order to avoid taxes and to raise profitability. This also gave freedom to the management to move currency and to hide losses. The then CFO, Andrew Fastow was the brain behind all these arrangements. His creation of these off books companies enabled him and his friends and family members make millions of dollars at the expense of other stake holders. Th
