Unformatted text preview: ka pipeline
Enron incurred massive debt and no longer had
exclusive rights to its pipelines.
Needed new and innovative business strategy
Kenneth Lay, CEO, hired McKinsey & Company to assist
in developing business strategy. They assigned a young
consultant named Jeffrey Skilling.
His background was in banking and asset and liability
His recommendation: that Enron create a “Gas Bank”—
to buy and sell gas © 2003, 2005 by the
AICPA Enron’s History (cont’d)
Created Energy derivative
Lay created a new division in 1990 called Enron Finance
Corp. and hired Skilling to run it
Enron soon had more contracts than any of its competitors
and, with market dominance, could predict future prices
with great accuracy, thereby guaranteeing superior profits.
Skilling hired the “best and brightest” traders and rewarded
them handsomely—the reward system was eat what you
Fastow was a Kellogg MBA hired by Skilling in 1990—
Became CFO in 1998
Started Enron Online Trading in late 90s
View Full Document