Our North America Business Correspondent Stephen Evans reports on what's being described as one of the biggest financial scandals in history.
The Fall of Enron is a drama worthy of the writers of the old Texas soap opera, Dallas. It's about money, power, secrecy and a world of people with the highest connections from Wall Street to the White House. It is also about people not doing the right thing, to put it at its gentlest, and about others losing their life savings.
The crucial dates are October 16, 2001 and November 8, 2001. On the first date, Enron, previously the symbol of corporate success, disclosed that it had made a loss of $618 million that quarter. On the second date, it disclosed that it had overstated its earnings since 1997 by $586 million. In other words, its company accounts over the previous four years had not shown the true state of its huge indebtedness. On October 31, after the disclosure of the losses, the Securities and Exchange Commission launched an enquiry and the slide towards bankruptcy accelerated.
The nub of what the undoubtedly clever people at the top of Enron did was to create a web of partnerships - companies it controlled - but whose debts did not appear on the balance sheet. So if you bought Enron shares in August 2000 when they stood at $90 each, you wouldn't have been aware that you were buying a big bunch of debt as well - you wouldn't have known that you were buying a very grand house built on fine sand.
So the crucial questions are; who knew about the odd, dangerous structure of the company when the "off-book" partnerships were set up? Who knew the share-price was about to collapse because the structure was so unsteady? Who sold shares with that private knowledge - and shares worth a billion dollars were sold while the employees were prevented from removing their shares from their pension fund? If directors didn't know the dangers, shouldn't they have? If they did know, what did they do about it?
And what should the auditors, Arthur Andersen, have done? What they certainly did do was shred lots of documents. What they are also now doing is fighting for their company's life.
Clever the people at Enron were; wise they weren't. The question now being pursued is; were they also criminal?
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