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Defunct / Asset-less Shell
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Ask Why
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The World's Leading Company
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Omaha, Nebraska , 1985
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Houston, Texas , USA
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Kenneth Lay , Founder, former Chairman and CEO<br /> Jeffrey Skilling , former CEO and COO<br /> Andrew Fastow , former CFO<br /> Rebecca Mark-Jusbasche , former Vice Chairman, Chairman and CEO of Enron International<br /> Stephen F Cooper , Interim CEO and CRO<br /> John J Ray, III , Chairman
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Energy
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approx 300 as of 2007
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$111 billion (in 2000)
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(formerly '''Enron Corporation''') (former
Energy company based in
Houston ,
Texas . Before its
Bankruptcy in late 2001, Enron employed around 21,000 people (McLean & Elkind, 2003) and was one of the world's leading electricity, natural gas, pulp and paper, and communications companies, with claimed revenues of $111 billion in 2000. ''
Fortune '' named Enron "America's Most Innovative Company" for six consecutive years. It
Achieved Infamy At The End Of 2001 , when it was revealed that its reported financial condition was sustained mostly by institutionalized, systematic, and creatively planned
Accounting Fraud . Enron has since become a popular symbol of willful corporate fraud and corruption.
Enron filed for
Bankruptcy protection in the Southern District of New York in late 2001 and selected
Weil, Gotshal & Manges as their bankruptcy counsel. Enron still exists as an asset-less shell corporation, emerging from bankruptcy in November of 2004 after one of the biggest and most complex bankruptcy cases in U.S. history. On
September 7 2006 , Enron sold
Prisma Energy International Inc. , its last remaining business, to Ashmore Energy International Ltd. Following the scandal, lawsuits against Enron's directors were notable because the directors settled the suits by paying very significant sums of money personally. The scandal also caused the dissolution of the
Arthur Andersen accounting firm, affecting the wider business world.http://news.bbc.co.uk/1/hi/business/2047122.stm
Enron Creditors Recovery Corp. will continue to operate under the name Enron Corp. by filing a
Doing Business As , or "dba" certificate in
Harris County ,
Texas .
Enron has its roots in
Omaha, Nebraska , with
Northern Natural Gas Company , formed in 1931 and reorganized under a
Holding Company in 1979,
InterNorth , which purchased the smaller
Houston Natural Gas in 1985, changing its name to Enron in the process
Enron was originally involved in the transmission and distribution of electricity and gas throughout the United States and the development, construction, and operation of
Power Plant s,
Pipelines , and other infrastructure worldwide. In 1998, Enron moved into the
Water Sector , creating the
Azurix Corporation, which it part-floated on the
New York Stock Exchange (NYSE) in June 1999. Azurix failed to break into the
Water Utility market, and one of its major concessions, in
Buenos Aires , was a large-scale money-loser. In April 2001, Enron announced its intention to break up Azurix and sell its assets.
Enron grew wealthy, it claimed, through its pioneering,
Marketing and
Promotion of power and
Communication s
Bandwidth Commodities and related
Derivatives as tradable
Financial Instruments , including exotic items such as
Weather Derivatives . Enron was named "America's Most Innovative Company" by ''
Fortune Magazine '' for six consecutive years, from 1996 to 2001. It was on the ''Fortune''
's "100 Best Companies to Work for in America" list in 2000, and had offices that were, in hindsight, stunning in their opulence. Enron was hailed by many, including labor and the workforce, as an overall great company, praised for its large long-term pensions, benefits for its workers and extremely
Effective Management until its exposure in corporate fraud.
As was later discovered, many of Enron's recorded assets and profits were inflated, or even wholly fraudulent and nonexistent, by putting debts and losses into entities formed "offshore" that were not consolidated with (included in) the company's
Financial Statements and, in addition, by the use of other sophisticated and arcane financial transactions between Enron and related companies formed to take unprofitable entities off the company's books.
Its most valuable asset and the largest source of honest income, the 1930s-era Northern Natural Gas, was eventually purchased back by a group of Omaha investors, who moved its headquarters back to Omaha, and is now a unit of
Warren Buffett 's Mid-American Energy Holdings Corp. NNG was put up as collateral for a $2.5 billion capital infusion by
Dynegy Corporation when Dynegy was planning to buy Enron. When Dynegy took a close look at Enron's books they backed out of the deal and fired their CEO, Chuck Watson. Ironically the new chairman and interim CEO, the late Daniel Dienstbier, had been president of NNG and an Enron executive at one time and an acquaintance of Warren Buffett. NNG continues to be profitable today.
Enron traded in more than 30 different products including the following.
It was also an extensive
Futures Trader , including sugar, coffee, grains, hog, and other meat futures. At the time of its bankruptcy filing in December, 2001, Enron was structured into seven distinct business units.
- EnronOnline (commodity trading platform)
- ClickPaper (transaction platform for pulp, paper, and wood products)
- EnronCredit (credit risk solutions)
- ePowerOnline (customer interface for Enron Broadband Services)
- Enron Direct (sales of fixed-price contracts for gas and electricity- Europe only)
- EnergyDesk (energy-related derivatives trading- Europe only)
- NewPowerCompany (online energy trading, joint venture with IBM and AOL )
- Enron Weather (weather derivatives)
- DealBench (online business services)
- Water2Water (water storage, supply, and quality credits trading)
- HotTap (customer interface for Enron's U.S. gas pipeline businesses)
- EnronStrommarkt (business to business pricing and information platform- Germany only)
- Enron Intelligent Network (broadband content delivery)
- Enron Media Services (risk management services for media content companies)
- Customizable Bandwidth Solutions (bandwidth and fiber products trading)
- Streaming Media Applications (live or on-demand Internet broadcasting applications)
- Enron Power (electricity wholesaling)
- Enron Natural Gas (natural gas wholesaling)
- Enron Pulp and Paper, Packaging, and Lumber (risk management derivatives for forest products industry)
- Enron Coal and Emissions (coal wholesaling and CO2 offsets trading)
- Enron Plastics and Petrochemicals (price risk management for polymers, olefins, methanol, aeromatics, and natural gas liquids)
- Enron Weather Risk Management (weather derivatives)
- Enron Steel (financial swap contracts and spot pricing for the steel industry)
- Enron Crude Oil and Oil Products (petroleum hedging)
- Enron Wind Power Services (wind turbine manufacturing and wind farm operation)
- MG Plc. (U.K. metals merchant)
- Commodity Management
- Energy Asset Management
- Energy Information Management
- Facility Management
- Capital Management
- Azurix Inc. (water utilities and infrastructure)
Enron manufactured gas valves, circuit breakers, thermostats, and electrical equipment in Venezuela through
INSELA SA, a 50-50 joint venture with
General Electric .
Enron owned three paper and pulp products companies:
Garden State Paper , a newsprint mill; as well as
Papiers Stadacona and
St. Aurelie Timberlands .
Enron held a controlling stake in the Louisiana-based petroleum exploration and production company
Mariner Energy .
In November 1995, Enron launched EnronOnline. EnronOnline was the first web-based transaction system that allowed buyers and sellers to buy, sell, and trade commodity products globally. It allowed users to do business only with Enron. Due to the giant cash needs of Enron Online and the company wasting money in other areas such as broadband,
Azurix ,
Enron Energy Services , and shutting down the original pipeline service which generated cash flow, Enron virtually drained itself of cash. The Enron Global Finance department had to keep working up more creative financing moves to keep the company running.
EnronOnline went live on
November 29 1999 . The site allowed energy users to do business in a previously unseen way. Until this point a
Trade r who wanted to buy an
Energy Contract talked with another energy trader who wanted to sell a contract, and from there terms were agreed. EnronOnline allowed
Market participants to see prices on their screen just like a
Stock Ticker , and could do business much more simply.
The main commodities offered on EnronOnline were
Natural Gas and
Electricity , although there were 500 other products including
Credit Derivative s,
Bankruptcy Swap s, pulp, gas,
Plastic s,
Paper ,
Steel ,
Metal s,
Freight , and
TV Commercial time.
EnronOnline was seen as an impressive tool, but because Enron was either buying, selling, or trading in every transaction, the costs increased as time went on, and the systems were involved in the financial misreporting and other questionable financial behavior that eventually led to the Enron's demise. However, EnronOnline spawned several other e-commerce websites including
www.DealBench.com . DealBench is an acquisition and divestiture tool still operating today. As of this writing, Enron still operates the DealBench code under the name EnronAssets. Other Enron developed technologies include Commodity Logic, ClickPaper and
EnronCredit .
EnronOnline closed down for online trading on the morning of
November 28 ,
2001 , with Enron filing for
Bankruptcy four days later. Its registration, now administered by one Francis Ditta, expires on
April 27 2010 .
At the time of bankruptcy, Enron owned all or interests in the following major assets:
:
Enron owned or operated 38 electric power plants worldwide
- Teeside (United Kingdom) - at the time of commission in 1992, at 1750 MW, was the largest Natural Gas Co-Gen plant in the world. Its on-time and under-budget completion put Enron Power on the map as an international developer, owner and operator.
- Bahia Las Minas (Panama)- largest thermal power plant in Central America, 355 MW
- Puerto Quetzal Power Project (Guatemala) - 110 MW
- PQP LLC (Guatemala) - holding company for 124 MW Power Barge named "Esperanza"
- Empresa Energetica Corinto (Nicaragua) - holding company for "Margarita II" 70.5 MW power barge, Enron held 35% share
- EcoElectrica (Puerto Rico, USA) - 507 MW natural gas cogeneration plant, with adjacent LNG import terminal- supplied 20% of island's electricity
- Puerto Plata Power Project (Dominican Republic) - 185 MW power barge named "Puerto Plata"
- Modesto Maranzana Power Plant (Argentina) - 70 MW
- Cuiaba Integrated Project (Brazil) - 480 MW combined cycle power plant
- Nowa Sarznya Power Plant (Poland) - 116 MW, first privately developed post-Communist electricity project in Poland
- Sarlux Power Project (Italy) - 551 MW combined cycle power plant, converted residue from Italy's largest oil refinery into synthetic gas for fuel
- Trakya Power Project (Turkey) - 478 MW
- Chengdu Cogen Project (China) - 284 MW, joint venture with Sichuan Electric Company
- Northern Marianas Power Project (Guam, USA) - 80 MW slow speed diesel oil plant
- Batangas Power Project (Philippines) - 110 MW
- Subic Bay Power Project (Philippines) - 116 MW
- Dabhol Power Project (India) - 2,184 MW combined cycle plant, generally considered one of Enron's most controversial and least successful projects
- Storm Lake Wind Generation Project (Iowa, USA) - 193 MW wind farm
- Lake Benton II Wind Generation Facility (Minnesota, USA) - 104 MW wind farm
- Lake Benton I Wind Generation Facility (Minnesota, USA) - 107 MW wind farm
- Cabazon Wind Generation Facility (California, USA) - 40 MW wind farm
- Green Power I Wind Generation Facility (California, USA) - 16.5 MW wind farm
- Indian Mesa I Wind Generation Facility (Texas, USA) - 25.5 MW wind farm
- Clear Sky Wind Power Generation Facility (Texas, USA) - 135 MW wind farm
- Mill Run Wind Wind Power Generation Facility (Pennsylvania, USA) - 15 MW wind farm
- Trent Mesa Wind Generation Facility (Texas, USA) - 150 MW wind farm
- Montfort Wind Generation Facility (Wisconsin, USA) - 30 MW wind farm
- 8 hydroelectric plants in Oregon with a combined capacity of 509,000 kW, owned through Portland General Electric
- 4 additional thermal plants in Oregon and Montana with a combined capacity of 1,464,000 kW, owned through Portland General Electric
- Centragas (Colombia) - 357 miles, natural gas
- Promigas (Colombia)
- Transportadora de Gas del Sur (Argentina) - largest pipeline system in South America, 5,005 km
- CEG (Brazil) - 1,368 miles, natural gas
- CEGRio (Brazil)
- Transredes (Bolivia) - 3,000 km natural gas pipeline and 2,500 km oil & liquids pipeline
- Bolivia-to-Brazil Pipeline (Bolivia/Brazil) - 3,000 km, natural gas
- Northern Natural Gas (Upper Midwestern USA) - 16,500 miles, included share in Trailblazer Pipeline
- Transwestern Pipeline (Texas, Arizona, New Mexico, Colorado) - 2,554 miles
- Florida Gas Transmission (Texas, Louisiana, Alabama, Mississippi, Florida) - 4,800 miles
- Northern Border Pipeline (Indiana, Illinois, Iowa, South Dakota, North Dakota, Montana ) - 1,249 miles
- Portland General Electric Company (USA) - serving 775,000 customers in Oregon
- Elektro Electricidade e Servicos S.A. (Brazil) - 1.5 million customers
- Compania Anonima Luz y Fuerza Electricas de Puerto Cabello (Venezuela) - 50,000 customers
- ProCaribe (Puerto Rico, USA) - LPG storage terminal, only fully refrigerated LPG storage facility in Caribbean
- San Juan Gas Company (Puerto Rico, USA) - gas distribution, 400 industrial/commercial customers
- Industrial Gases Ltd. (Jamaica) - 8 filling plants, industrial gas manufacturing & LPG distribution, held 100% monopoly on Jamaican industrial gas business and 40% of LPG business
- Gaspart (Brazil) - consortium of 7 gas distribution companies
- Vengas (Venezuela) - LPG transportation and distribution
- SK-Enron Company Ltd. (South Korea) - joint venture with SK Corporation ; included 8 city gas utilities, an LPG distributor, and a steam and electricity cogeneration facility
- Garden State Paper Company Inc. (New Jersey, USA) - paperboard and newsprint recycling mill
- Papiers Stadacona Ltee. (Quebec, Canada) - wood pulp & paper mill
- St. Aurelie Timberlands Company Ltd. (Quebec, and New Brunswick, Canada & Maine, USA) - timber company
- Mariner Energy Inc. (Houston, Texas, USA) - oil & gas exploration, development, and production with operations in the Gulf of Mexico
- Interruptores Especializados Lara (Venezuela) - manufacturer of valves, thermostats, and electrical breakers for appliances
- Enron Wind - manufacturer of wind power turbines and related systems, with factories in USA, Spain, and Germany
See Also: Enron scandal
After a series of revelations involving irregular accounting procedures bordering on fraud, perpetrated throughout the 1990s, involving Enron and its accounting firm
Arthur Andersen , Enron stood at the verge of undergoing the largest bankruptcy in history by mid-November 2001. A
White Knight rescue attempt by a similar, smaller energy company,
Dynegy , was not viable. Enron filed for Bankruptcy on
December 2 2001 .
As the scandal was revealed, Enron shares dropped from over US$90.00 to just pennies. As Enron had been considered a
Blue Chip stock, this was an unprecedented and disastrous event in the financial world. Enron's plunge occurred after it was revealed that much of its profits and revenue were the result of deals with
Special Purpose Entities (
Limited Partnership s which it controlled). The result was that many of Enron's debts and the losses that it suffered were not reported in its
Financial Statements .
In addition, the scandal caused the dissolution of
Arthur Andersen , which at the time was one of the world's top accounting firms.
Congressman Phil Gramm, the second largest recipient of campaign contributions from Enron, succeeded in legislating California's energy commodity trading deregulation. Despite warnings from prominent consumer groups which stated that this law would give energy traders too much influence over energy commodity prices, the legislation was passed in December 2000.
As
Public Citizen reported, "Because of Enron’s new, unregulated power auction, the company’s 'Wholesale Services' revenues quadrupled — from $12 billion in the first quarter of 2000 to $48.4 billion in the first quarter of 2001."
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Prior to the passage of the deregulation law, there had been only one Stage 3 rolling blackout. Following the passage, California experienced a total of 38 blackouts defined as Stage 3 rolling blackouts until federal regulators intervened in June 2001. These blackouts occurred largely as a result of the manipulation by traders and marketers. By withholding energy and shutting down generators, frenzy appeared in the market and energy prices climbed higher on the west coast. Enron traders were revealed as intentionally encouraging the removal of power from the market during California's energy crisis by encouraging suppliers to shutdown plants to perform unnecessary maintanence, as documented in recordings made at the time.http://www.truthout.org/cgi-bin/artman/exec/view.cgi/37/8796 These acts contributed to the necessity for "rolling blackouts", which adversely affected numerous businesses dependent upon a reliable supply of electricity and inconveniencing a large number of retail consumers.
According to the industry consultant Charles Cicchetti, former chairman of the Wisconsin Public Service Commission: "Two things should be obvious. First, none of this should be called deregulation. Second, it is difficult to see how any of these myriad regulatory schemes, unless altered significantly but perhaps not fundamentally, will lower prices."
- Mimi Swartz , Sherron Watkins , ''Power Failure: The Inside Story of the Collapse of Enron'' (Doubleday, 2003) ISBN 0-385-50787-9
- '' (Portfolio, 2003) ISBN 1-59184-008-2
- Robert Bryce , ''Pipe Dreams: Greed, Ego, and the Death of Enron'' (PublicAffairs, 2002) ISBN 1-58648-138-X
- Lynn Brewer , Matthew Scott Hansen , ''House of Cards, Confessions of An Enron Executive'' (Virtualbookworm.com Publishing, 2002) ISBN 1-58939-248-5 ISBN 1-58939-248-5
- '' (Broadway Books, 2005) ISBN 0-7679-1178-4
- Peter C. Fusaro , Ross M. Miller , ''What Went Wrong at Enron: Everyone's Guide to the Largest Bankruptcy in U.S. History'' (Wiley, 2002), ISBN 0-471-26574-8
- Loren Fox , ''Enron: The Rise and Fall.'' (Hoboken, N.J.: Wiley, 2003)
