the play see enron play . enron corporation enron corp ask why former type public traded as nyse ene industry energy fate bankruptcy predecessor internorth northern natural gas company houston natural gas merged in 1985 successor dynegy prisma energy international founded 1985 1985 in omaha nebraska united states founder kenneth lay defunct 2007 2007 headquarters 1400 smith street houston texas united states key people kenneth lay founder chairman and ceo jeffrey skilling former president coo and ceo andrew fastow former cfo rebecca mark jusbasche former vice chairman chairman and ceo of enron international stephen f. cooper interim ceo and cro number of employees 20 600 2001 website www.enron.com enron corporation was an american energy commodities and services company based in houston texas . it was founded in 1985 as the result of a merger between houston natural gas and internorth both relatively small regional companies in the u.s. before its bankruptcy on december 2 2001 enron employed approximately 20 000 staff and was one of the world s major electricity natural gas communications and pulp and paper companies with claimed revenues of nearly 111 billion during 2000 . 1 fortune named enron america s most innovative company for six consecutive years . at the end of 2001 it was revealed that its reported financial condition was sustained by institutionalized systematic and creatively planned accounting fraud known since as the enron scandal . enron has since become a well known example of willful corporate fraud and corruption . the scandal also brought into question the accounting practices and activities of many corporations in the united states and was a factor in the enactment of the sarbanes oxley act of 2002 . the scandal also affected the greater business world by causing the dissolution of the arthur andersen accounting firm . 2 enron filed for bankruptcy in the southern district of new york in late 2001 and selected weil gotshal & manges as its bankruptcy counsel . it ended its bankruptcy during november 2004 pursuant to a court approved plan of reorganization after one of the most complex bankruptcy cases in u.s. history . a new board of directors changed the name of enron to enron creditors recovery corp. and emphasized reorganizing and liquidating certain operations and assets of the pre bankruptcy enron . 3 on september 7 2006 enron sold prisma energy international inc. its last remaining business to ashmore energy international ltd. now aei . 4 contents 1 history 1.1 pre merger origins 1925 1985 1.1.1 internorth 1.1.2 houston natural gas 1.1.3 merger 1.2 post merger rise 1985 1991 1.3 1991 2000 1.3.1 operations as a trading firm 1.3.2 entrance into the retail energy market 1.3.3 overseas expansion 1.4 misleading financial accounts 2 2001 accounting scandals 2.1 accounting practices 2.2 post bankruptcy 3 insider trading scandal 3.1 peak and decline of stock price 4 california s deregulation and subsequent energy crisis 5 former management and corporate governance 6 products 6.1 online marketplace services 6.2 broadband services 6.3 energy and commodities services 6.4 capital and risk management services 6.4.1 commercial and industrial outsourcing services 6.4.2 project development and management services 6.5 enrononline 6.6 enron international 6.6.1 management 6.6.2 projects 6.6.3 india 6.6.4 project summer 6.7 enron global exploration & production inc. 7 enron prize for distinguished public service 8 enron s influence on politics 9 see also 10 references 11 bibliography 12 external links 12.1 data history edit pre merger origins 1925 1985 edit internorth edit one of enron s primary predecessors was the northern natural gas company which was formed in 1930 in omaha nebraska just a few months after black tuesday . the low cost of natural gas and cheap labor supply during the great depression helped to fuel the company s early beginnings . the company doubled in size by 1932 and was able to bring the first natural gas to minnesota . over the next 50 years northern expanded even more as it acquired many energy companies and created new divisions within . it was reorganized in 1979 as the main subsidiary of a holding company internorth which was a diversified energy and energy related products company . although most of the acquisitions conducted were successful some ended poorly . internorth competed with cooper industries over a hostile takeover of crouse hinds company who manufactured electrical products . internorth was ultimately unsuccessful as cooper bought out crouse hinds . cooper and internorth feuded over numerous suits over the course of the takeover that were eventually settled after the transaction was completed . the subsidiary northern natural gas operated the largest natural gas pipeline company in north america . by the 1980s internorth became a major force for natural gas production transmission and marketing as well as for natural gas liquids and was an innovator in the plastics industry . 5 houston natural gas edit the houston natural gas hng corporation was initially formed from the houston oil co. in 1925 to provide gas to customers in the houston market through the building of oil pipelines . under the leadership of ceo robert herring from 1967 to 1981 the company became a large dominant force in the energy sector with a large pipeline network as a result from prosperous period of growth in the early to mid 1970s . this growth was largely seen from the exploitation of unregulated texas natural gas market and the commodity surge in the early 1970s . towards the end of the 1970s hng s luck began to run out with rising gas prices forcing clients to switch to oil . in addition with the passing of the natural gas policy act of 1978 the texas market was more difficult to profit from and as a result the profits of hng fell . after herring s death in 1981 m.d. matthews briefly took over as ceo in a 3 year stint with initial success but ultimately saw a big dip in earnings that led to his exit . in 1984 kenneth lay succeeded matthews and inherited the troubled but large diversified energy conglomerate . 6 merger edit internorth in its conservative success became a target of corporate takeovers . the most prominent being corporate raider irwin jacobs . 7 internorth ceo sam segnar in searching for a company to merge with to fend off takeover attempts as a poison pill discovered hng . in may 1985 internorth acquired hng for 2.3 billion 40 % higher than the current market price 8 in order to avoid the corporate takeover attempt . the combined assets of the two companies would create the second largest gas pipeline system at the time in the united states . 9 internorth s north south pipelines that served iowa and minnesota complemented hng s florida and california east west pipelines well . 8 post merger rise 1985 1991 edit the company was initially named hng internorth inc. even though internorth was technically the parent . 9 at the outset segnar was ceo for a short time before he was fired by the board of directors whereupon lay was tapped to be the new ceo . lay moved the headquarters of the new company back to energy capital houston . the company then set out to find a new name spent upwards of 100 000 in focus groups and consulting before enteron was suggested . the name was eventually dismissed over its apparent likening to an intestine and shortened to enron . 7 8 enron still had some lingering problems leftover from its merger however . the company had to pay off jacobs over 350 million who was still a threat and reorganize the company . 7 lay sold off any parts of the company that he didn t believe belong in the long term future of enron . lay consolidated all the gas pipeline efforts under the enron gas pipeline operating company . in addition the company began to ramp up its electric power and natural gas efforts . in 1988 and 1989 the company began adding power plants and cogeneration units to its portfolio . in 1989 jeffrey skilling then a consultant at mckinsey & co. came up with the idea to link natural gas to consumers in more ways effectively turning natural gas into a commodity . enron adopted the idea and called it the gas bank . the division s success prompted skilling to join enron as the head of the gas bank in 1991 . 9 another major development inside enron was the beginning of the company s pivot to overseas that was expanded upon in the 1990s . starting in 1989 the company received a 56 million loan from the overseas private investment corporation opic for a power plant in argentina . enron complex in downtown houston . 1991 2000 edit over the course of the 1990s enron made a few changes to its business plan that greatly improved the perceived profitability of the company . firstly enron invested heavily in overseas assets specifically energy . another major shift was the gradual transition of focus from a producer of energy to a company that acted more like an investment firm and sometimes a hedge fund making profits off the margins of the products it traded . these products were traded through the gas bank concept now called the enron finance corp. headed by skilling . 7 operations as a trading firm edit with the success of the gas bank trading natural gas skilling looked to expand the horizons of his division enron capital & trade . skilling hired andrew fastow in 1990 to help with this . entrance into the retail energy market edit starting in 1994 under the energy policy act of 1992 congress allowed states to deregulate their electricity utilities allowing them to be opened for competition . california was one such state to do so . enron seeing an opportunity with rising prices was eager to jump into the market . in 1997 enron acquired portland general electric pge ; while an oregon utility it had potential to begin serving the massive california market since pge was a regulated utility . the new enron division enron energy ramped up its efforts by offering discounts to potential customers in california for switching their electric supplier to enron from their previous supplier starting 1998 . enron energy also began to sell natural gas to customers in ohio and wind power in iowa . however in 1999 the company ended its retail endeavor only offering wholesale energy as it was revealed it was spending upwards of 100 million a year . 5 7 9 overseas expansion edit enron seeing stability after the merger began to look overseas for new possible energy opportunities in 1991 . enron s first such opportunity was a natural gas power plant utilizing cogeneration that the company built in teesside uk . 5 8 the power plant was so large it could produce up to 3 % of the united kingdom s electricity demand with a capacity of over 1 875 megawatts . 10 seeing the success in england the company developed and diversified its assets worldwide under the name of enron international ei headed by former hng executive rebecca mark . by 1994 ei s portfolio included assets in philippines australia guatemala germany france india argentina the caribbean china england colombia turkey bolivia brazil indonesia norway poland and japan . the division was becoming a large share of earnings for enron contributing 25 % of earnings in 1996 . mark and ei believed the water industry was the next market to be deregulated by authorities and seeing the potential searched for ways to enter the market similar to pge . in 1998 enron international acquired wessex water for 2.88 billion . 11 wessex water was renamed as azurix and began making deals to expand its share . ultimately after a promising ipo the venture was a bust mark shed millions of dollars in operating the company was a large reason