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CASE 7 Enron: Were They the Crookedest Guys in the Room? Summary In May 1985 it was announced that Internorth Incorporated and Houston Natural Gas would mere with an estimated value of $2.3 billion. In 1990 Jeffrey Skilling left the consulting firm McKinsey & Company to run Enron Finance Corporation, a division created by Kenneth Lay and tailored for Skilling. In 1997 Skilling became the president and chief operating officer at Enron. In 1997 Enron advertised during the Super Bowl XXXI telecast. Ken Lay wanted Enron to have the same brand recognition as AT&T. In October 2000 Jordan Mintz was transferred to Andrew Fastow’s finance divison as a lawyer. He discovered that Fastow was negotiating representing his partnership, and his subordinates were representing Enron in the deals. From 1998 to 2000, the total compensation paid to the top two hundred executives at Enron went from $193 million to $1.4 billion. There was a simple understanding at Enron. The company believed it could get the best and brightest employees and pay them the best in the industry, but they have o perform or they are gone. Jeff Skilling implemented the performance review committee that would evaluate the employees at Enron. It quickly got a reputation form being the toughest employee ranking system for any company in the United States. In Marc 2001 the first crack in the armor of Enron occurred when Bethany McLean from Fortune Magazine wrote an article titled “Is Enron Overpriced?”. The core of her questions was a simple one: How does Enron make its money?. On August 14, 2001, Jeffrey Skilling resigned as Enron’s CEO and president. Skilling and take over from Key Lay as CEO in January 2001, and Lay regained his title of CEO, which he had held for fifteen years in addition to being the chairman of the board. Skilling stated personal reason as the explanation fro his quick departure as CEO, although Enron stock had dropped by almost half in the eight months during Skilling’s reign as CEO. On June 12, 2001, Jeffrey Skilling was a featured speaker at the Strategic Directions technology conference. During the mid-1990s, Enron adopted one of its many controversial strategies, mark-to market
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MILLYTA - hi all

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