-Caveat Lector-
From
http://www.guardian.co.uk/business/story/0,3604,609501,00.html
}}}>Begin
Enron suffers biggest collapse in corporate history
Richard Wray in New York and Geoff Gibbs
Friday November 30, 2001
The Guardian
Enron Corporation, the US energy group embroiled in allegations of
financial irregularities and saddled with $15bn (£10bn) of debt, was
last night poised to file for the biggest bankruptcy reorganisation
in corporate history.
The firm employs 4,000 workers in Britain at Wessex Water and power
stations on Teesside. It is a big trader on the London Metal
Exchange.
The company, whose main business is energy trading, is in crisis
following the termination of a multi-billion pound rescue bid. Rival
company Dynegy pulled out of merger talks to save the debt-ridden
company, which has seen its shares collapse by 90% since mid-October.
As reverberations were felt across the world's energy and financial
markets, administrators were called in at the group's London-based
European arm. Some markets halted Enron operations and Wall Street
braced itself for a blizzard of litigation.
The Houston based group, of which former energy secretary Lord
Wakeham is a non-executive director, is facing the prospect of a
barrage of lawsuits from investors who fear their savings and
pensions will disappear if Enron goes under.
Lord Wakeham, who joined the Enron board in 1994, was yesterday
unavailable for comment.
If Enron is forced under, lawyers said they will target its senior
management, accountants and financial advisers in their quest for
compensation.
In New York yesterday, Enron shares plunged still further on the
expectation that the firm will seek protection from its creditors
within days.
In Europe administrators have warned of job losses among 5,000
European workers. Water watchdog Ofwat said it had been assured it
was "business as usual" for services delivered by Wessex Water, so
customers would see no changes in service. An official at Wessex
Water, which employs 1,400 workers and serves millions of customers
in Wiltshire, Dorset, Somerset, Hampshire, Devon and Gloucester, said
whatever happened at Enron would have no effect on Wessex's services
or its financial position.
Guardian Unlimited © Guardian Newspapers Limited 2001
End<{{{
From
http://www.guardian.co.uk/business/story/0,3604,609356,00.html
}}}>Begin
Enron struck low by scandal
Friday November 30, 2001
The Guardian
Enron Corporation's collapse has created a frisson in the anti-
corporate movement. Here's a real scalp - a big US firm, bankrolling
President Bush while plundering the world's resources from Nicaragua
to Guam.
This might be the point where, as one columnist put it recently, "the
battle against corporate power resumes."
Of course it is nothing of the kind. Enron has been struck low by
financial scandal, not by some sudden environmental backlash. The
company has spent the last three years racing around the globe,
fixing deals left, right and centre. It became the world's biggest
energy trader, but Wall Street's finest - watching the stock price
multiply -never really bothered to probe the numbers. As soon as the
Securities & Exchanges Commission did so, the whole edifice crumbled.
But there are lessons here about listening to anti-corporate voices.
To investors, Enron presented itself as a model of social
responsibility, with statements and policies on everything from
climate change to human rights. Yet just about everywhere it did
business, it got into trouble.
It was a badly managed company. The evidence of lack of control in
the boardroom was sitting there at the proverbial coalface, where
demonstrators were busy drawing attention to Enron's unacceptable
behaviour.
Global companies that have a clear responsiveness to, say,
environmental concerns tend to also have a clear responsiveness to
their shareholders. Just look at Shell over recent years or BP or
Anglo American. Look at De Beers, which yesterday agreed a new
certification scheme with African governments, NGOs and other members
of the World Diamond Council to try to eradicate so-called "conflict
diamonds."
For big modern companies, social responsibility is about protecting
shareholder value. If it was tradeable, the markets would call it a
growth stock.
End<{{{
From
http://www.guardian.co.uk/leaders/story/0,3604,609288,00.html
}}}>Begin
Crash of the cult
Enron tolls the bell for deregulation
Leader
Friday November 30, 2001
The Guardian
Until a few weeks ago, a huge banner was strung across the
headquarters of Enron in Houston, emblazoned "The world's leading
company". There were plenty who endorsed the claim and the corporate
culture of ambition, arrogance and rapid money-making which lay
behind it. Enron's revenue growth had been spectacular, from $7.6bn
in 1986 to $101bn in 2000. The accolades from analysts, management
consultants and internet gurus poured in: as recently as last June,
the Economist praised Enron for creating what might be the "most
successful internet venture of any company in any industry anywhere".
But, the banner was recently taken down and in one of the biggest
corporate collapses in US history, Enron's shares fell 85% on
Wednesday (and more yesterday). The corporation is now expected to
file for bankruptcy in the next few days. But this is more than a
spectacular corporate saga, it also represents comeuppance for a form
of aggressive capitalism and political manipulation which earned
Enron many enemies.
A combination of borrowing heavily and concealing it in "off-balance
sheet" deals, meant that the crisis only became apparent a month ago.
The repercussions are now beginning to emerge as the company's
"aggressive accounting" - as the Wall Street Journal put it - is
unravelled, and major lenders such as JP Morgan Chase are likely to
be vulnerable. Not to mention the damage to thousands of Enron
employees' pensions, and the holdings of many investors in the US,
who saw it as one of the surest bets of the dot.com mania. But the
energy markets have not been as shaken as was first feared possible a
month ago.
Losers apart, there will be many dancing on Enron's grave. In the US,
it had attracted a degree of notoriety for its part in the bungled
privatisation of California's electricity, which led to black-outs
earlier this year. But it was in the developing world that Enron had
a near unparalleled reputation for corporate irresponsibility. It has
been the only company to warrant an entire Amnesty International
report, a chilling catalogue of human rights abuses from India to
Latin America. The anti-corporate movement accused Enron of
subverting the political process of virtually every country in which
it operated to advance its interests. Enron was in the thick of one
of India's biggest corruption scandals in which huge sums were paid
to politicians in the privatisation of electricity firms.
Such deals abroad relied on close co-operation from friends back home
in Washington, and once again Enron lavishly paid into election
campaign funds, most notably of George W Bush. Key political figures
were signed up as lobbyists and advisers. All the political
manoeuvring served the company's ideological vision of the primacy of
free markets, deregulation and privatisation. Enron was described as
an "evangelical cult" for the fervent advocacy of this vision by
Enron founder and chairman, Kenneth Lay - a vision from which he
personally profited by millions. The fact that the finance director
is also now being investigated for possible irregularities suggests a
culture of hubris and greed at the company's core. For the anti-
corporate movement, Enron is a major scalp (though exposure of its
wrongdoings was not the cause of the collapse). More importantly, it
is a reproof to stock traders who continued to boost Enron's shares
long after they had lost their understanding of its balance sheet.
And it trounces for ever the idea that public utilities can be
subject to light regulation amid such speculative profiteering.
Guardian Unlimited © Guardian Newspapers Limited 2001
End<{{{
~~~~~~~~~~~~~~~
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believe in anything merely on the authority of Teachers, elders or wise men.
Believe only after careful observation and analysis, when you find that it
agrees with reason and is conducive to the good and benefit of one and all.
Then accept it and live up to it."
The Buddha on Belief, from the Kalama Sutta
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A merely fallen enemy may rise again, but the reconciled
one is truly vanquished. -Johann Christoph Schiller,
German Writer (1759-1805)
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It is preoccupation with possessions, more than anything else, that
prevents us from living freely and nobly. -Bertrand Russell
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"Everyone has the right...to seek, receive and impart
information and ideas through any media and regardless
of frontiers."
Universal Declaration of Human Rights
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"Always do sober what you said you'd do drunk. That will
teach you to keep your mouth shut."
--- Ernest Hemingway
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