What is the biggest scandal in American history

Yesterday's westernsLong before Wirecard: Enron's gigantic balance sheet fraud

A few months before the sinking in December 2001, Jeffrey Skilling still wants to conquer the world. At the company headquarters of the US energy trading giant Enron in Houston, employees cheer when the management duo Skilling and Kenneth Lay announce a “new vision” and roll out a banner. It says: "From the largest energy company in the world to the largest company in the world".

They don't make it any smaller here - especially not Skilling, who already presented himself as “fucking smart” at Harvard Business School. Together with company founder Lay and thanks to the support of the US government, the ex-McKinsey man tore the energy industry out of the comfortable times when the state still controlled production and sales. They turn gas and electricity into a product that can be traded like stocks. Enron is becoming a huge trading platform - first for energy, then for paper, coal and even insurance against bad weather.

Skilling buys companies, lets its dealers make aggressive deals and has only one goal: to drive the stock price higher. A year before the crash, Enron is the seventh largest corporation in the United States. Top managers collect hundreds of millions of euros with their stock options.

Enron conjures up profits from debt

On December 2, 2001, Enron is surprisingly bankrupt - but also produces new superlatives in its downfall: the most massive balance sheet fraud in US history is exposed. Shareholders, banks and pension funds are losing $ 60 billion, 20,000 employees are losing their jobs, and many are losing their retirement plans. A wave of anger swept through the country.

For many years, Enron has pumped up the balance sheet, conjured up profits from debt. A network of more than 2000 partner companies, through which the group actually did business with itself, served for this purpose. In the Enron balance sheet only showed up the income. The debts disappeared in the partner companies.

Up until the very end, Skilling and Lay denied having known about the manipulations. They accuse their chief financial officer, who later testified against them as a key witness in the trial. Three years after the bankruptcy, a court finds both of them guilty. Lay dies of heart failure before the sentence is announced, and Skilling is now serving his sentence in an open prison. He has not yet seen the play about the Enron case, which also ran on Broadway.

main character

Jeffrey Skilling As Chief Operating Officer, was formally only number two at Enron - behind founder Kenneth Lay. But after joining in 1990, he became the brains of the group and embodied everything that Enron stood for: intelligence, aggressiveness, arrogance. To this day, Skilling, who also served as CEO for six months in 2001, is fighting against his conviction. In 2013, a court reduced his sentence by ten to 14 years.

 


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