White Collar Criminal Activities

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Enron-the smartest guys in the room

White collar criminal activities are financial frauds committed by business or government professionals for their own gains. These kinds of frauds were evident in Enron Company which led to its failure. Enron Company was one big power company which grew tremendously within sixteen years but it went into bankruptcy within weeks. Before its failure, it was one of the 7th largest co-operations in the world worth over seventy billion dollars. Its bankruptcy was as a result of intolerance and greed of top executives who were responsible for all transactions and decision making in the business. Enron Company was led by CEO Jeffrey skilling, Enron chairman Kenneth lay and chief financial officer (CFO) Andrew fastow. These three people were known as the smartest guys in the house and they carried complicated deals which made a lot of profits for the business.

Jeffrey skilling came from a very humble background but he was very ambitious and he worked hard until he acquired a PhD in economics which opened his door to the co-operate world. Investors trusted the three top executives of Enron which was catalyzed by the fast growth hence they invested more without any doubts. One of the methods they used to make money was by high stock price and posting good results every quarter hence analysts built confidence in them and they never questioned how the profit was made. Enron was never satisfied with stock rate rise and they kept on increasing the price so as to maintain the company profit level and maintain the business in the market in the long run. Enron was able to convince all other American co-operates that they were the best in the market so as to create better working relations with them.

Enron Power Company was taking very high risks in the market because they believed that high risks brought more money. The company had the best pipeline connections in the world which costed a lot of money in their construction. They built a power plant in India which every one else thought it would not be possible but they did it in a big way. But there was a problem which arose from that investment because India was not able to pay for the amount of the power the plant could produce. Enron had lost billions of money in that project but it continued to pay its executives millions of money even if no profit was coming in. The company never believed in failure and they had to come up with new ideas to propel their profit motives forward.

Enron tried to work with Portland General Electric (PGE) in order to survive in the market. This put Enron in electric market in California and all the PGE stock became Enron's within a short period of time. Analysts were not allowed to access financial information on Enron's transactions hence all the company deals remained a secret. While Enron stock kept rising, the business kept losing money but it tried to bond with other energy co-operates and it went to an extent of buying and selling bandwidth like a commodity. Enron continued to praise its broadband services network by saying it was making profit but the reality was, it was not doing well in the market and they were struggling with that technology.

By the year 2000, Enron had tried all the tricks to make the broad band market work without any success. The executives started selling their stocks; Kenneth lay sold fifty three million dollars, Cliff sold thirty five million dollars while Jeffrey skilling had sold 200 million dollars. This was one of the biggest white collar crimes which executives carried out without investor's knowledge. One of the company investors noticed that there was fraud and started investigations and it was clear that something was wrong. When skilling was called by a reporter concerning the fraud issue, he became irritated and thought that someone was trying to bring down Enron Company and make other investors lose the business trust. Fastow tried to pull out from the whole issue by telling the reporters not to include him on what they wrote or published about the company.

When news reached the media that Enron stocks were overpriced, executives quickly reacted on the same by saying that they could not tell everyone about all the financial secrets and transactions of the company. They tried to gold coat their deals by saying that it was just a competition strategy from other competitors. Andrew fastow the company chief financial officer, his job was to come up with explanations and strategies to cover up the fact that the company was losing money day by day. As a result, he and the other executives moved money around fake corporations and fabricated the financial results and reports of the company. Fastow hinded the fact that Enron had 30 billion dollars in debt of which it was not possible to pay and investors were not realizing.

Fastow used to sell Enron stocks in form of assets to LJM investments and he got a lot of profit which was not recorded in the company records since it was for his own gain. Enron lawyers, accountants and bankers never said no to all the white collar crimes but instead they pocketed their share of the money. Enron ventured into the Nigerian power market where they used to buy barges and warehouse them for a few months then sold them back at a profit which was very illegal. As more and more frauds were being carried out, Jeffrey looked into the numbers and got worried because of keeping the stock at high price and the company was continuously making losses.

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