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Essay on The Enron Collapse
The collapse of the energy trader Enron on December 2, the major bankruptcy in US corporate history has resulted in a sequence of increasingly serious remarks both in the American and international press. At the same time as detailing the extent of the collapse and the corrupt and possibly criminal activity that played such a crucial role in the functioning of Enron, sometimes in quite strident terms, all of this commentary serves an essential political purpose.
It seeks to stop investigation at the very point where it must go deeper. The decisive question which is not raised, let alone answered, is what are the driving forces within the economy that have led to the situation where corruption and even criminal activity have come to play such a central role. Enron was not only the seventh largest US Corporation; it was regarded as a market leader.
What really brought the Enron collapse was, when the firm reported its third quarter results in October 2001, it revealed a large black hole that sent its share price tumbling. The US financial regulator the Securities Exchange Commission (SEC) started an investigation into the firm and its results. Enron admitted it had inflated its profits, and filed for bankruptcy on 2 December that year. It transpired that millions of dollars of debt had been hidden in a complex web of transactions. Congressional hearings and regulatory investigations were launched, culminating in a criminal inquiry to try and find out who the main players were in Enron's demise. Investigators have been looking into allegations senior executives may have been involved in deception.
With total assets listed at $49.8 billion and debts of $31.2 billion, Enron is the major bankruptcy in American corporate history. Enron is now the subject of a Justice Department investigation that will probe the specific role of company executives and leading staff in the collapse and the cover-up, which preceded it....
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