¶ … Enron Scandal's Fraud
One of the more salient examples of the corruption type known as fraud took place in the initial years of the 20th century. It involved the multiple conglomerate entity known as Enron, which primarily operated in the natural resources and energy vertical. Enron engaged in fraud in many different levels. Perhaps the most noticeable of these applied to its book-keeping practices. Enron relied on a host of fraudulent accounting activities to widen its profit margins and to hide its losses. Subsequently, the vast majority of people that competed with, invested in, and worked for this company thought it was much more financially viable than it actually was. Some of these accounting practices included an inflated usage of marked to market accounting, which the company had approved for one specific type of asset management and regularly deployed for others (and throughout its accounting areas in general) (Norris and Eichenwald). Additionally, Enron adopted the fraudulent practice of creating paper companies and thinly veiled subsidiaries that it projected onto which it projected its losses. As such, it was able to conceal its mounting debt.
Enron also leveraged these fraudulent measures in additional ways that made its fraudulent activities both more pervasive and pernicious. For instance, high ranking executives in the company regularly encouraged employees and others to invest all they could in the company's stock -- while many of those same executives were selling their shares. There is a fair amount of fraud in this sort of insider trading, since it was primarily predicated on the notion that the company was financially successful when it was actually not. This fact is underpinned by the notion that those who were aware of the company's true financial state were the ones encouraging others to invest in Enron's stocks, while they were rapidly divesting themselves of those same things.
Works Cited
Norris, Floyd and Eichenwald, Kurt. "Enron's Many Strands: The Accounting; Fuzzy Rules of Accounting and Enron." www.nytimes.com. 2002. Web. http://www.nytimes.com/2002/01/30/business/enron-s-many-strands-the-accounting-fuzzy-rules-of-accounting-and-enron.html
Watkins, Thayer. "The Rise and Fall of Enron." www.sjsu.edu / No Date. Web. http://www.sjsu.edu/faculty/watkins/enron.htm#OFFBALANCE
