An important case study/ test case for the disciples of Finance/Business/Economics as well as psychology to learn from the rise and fall of business ventures. Business do not groom overnight. It requires a lot of potential, hard work, determination and dedication to achieve a position.
P.S. As a part of student learning series, this story is being publishing for your information and learning. The KeterOnline does not have any legal/moral evidence regarding truth or confidence about the story. All the below information is collected from libraries, books, internet and case studies. Hope you will enjoy the series.
Part 4/4
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What Was the Scheme?
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The mark-to-market practice led to schemes that were designed to hide the losses and make the company appear to be more profitable than it really was. In order to cope with the mounting losses, Andrew Fastow, a rising star who was promoted to CFO in 1998, came up with a devious plan to make the company appear to be in great shape, despite the fact that many of itssubsidiaries were losing money. That scheme was achieved through the use of special purpose entities (SPE). An SPE could be used to hide any assets that were losing money or business ventures that had gone under; this would keep the failed assetsoff of the company's books. In return, the company would issue to the investors of the SPE, shares of Enron's common stock, to compensate them for the losses. This game couldn't go on forever, however, and by April 2001, many analysts started to question the transparency of Enron's earnings.
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