The Enron Scandal and White Collar Crime

The Enron scandal has been touted as one of the worst scandals since the Savings & Loan debacle that occurred over a decade ago. The alarming situation developed over a company that at the time had employed over 21,000 staff members across the world. At its conclusion, the outpour was a devastating hit to the business world, having virtually destroyed the company it originated from while simultaneously sparking a new series of overarching restrictions to all large domestic companies.

Enron was involved in irregular accounting practices during the 1990's which involved the Arthur Andersen accounting firm. It ends up that Enron lied about profits over the years and concealed all the large debts that it owed through various unethical accounting practices. Its assets and profits were overstated and sometimes non existent. It claimed to have revenues over $111 billion dollars in 2000. Investors eventually discovered that they used LLP's to shelter all of its debts and losses and labeled it as "offshore." Enron had created offshore entities that can be used for planning and avoidance of taxes. This allowed the company to freely transfer funds between the entities and Enron's other holdings to hide the losses it incurred from shady business dealings. Consequently, the losses did not show up on the reported financial statements.

They had to continue to lie to keep up the façade that they were extremely profitable every quarter over several years. Arthur Andersen had to play with the numbers to make it work out year after year. Corrupt practices were compounded until they themselves became unsustainable to hide. The result was a tidal wave that swept across the business world in an uproar as the hidden fears of corrupt practices surfaced.