When Enron failed it was investigated thoroughly by the media. This investigation provides visibility into corporate behavior that is rarely available. For example:<\/p>\n\n\n\n
[Source: Pipe Dreams<\/a>]<\/p>\n\n\n\n Where does all of the money that corporations waste come from? It comes from you and me. This is the thing we fail to realize — when a CEO receives millions of dollars in salary and a $40 million private jet to use, or the executive team is flown to Cancun for a “corporate retreat” at a cost of millions of dollars…. that money does not materialize out of thin air. That money comes from consumers or from employees — you and me. In the case of Enron, we were paying far more for electricity and natural gas than we should have. Enron played a huge role in fabricating the California power crisis in 2001 and made billions of dollars from it. If it were not for this sort of abuse, prices would be much lower and we would all have more money to spend on the things we need.<\/p>\n\n\n\n It would be nice to think that Enron was a special case, but it is not. Hundreds of companies, including Worldcom, Tyco, Global Crossing, Qwest and Xerox, were caught in fraud, and when investigators looked inside they found amazing levels of abuse. When Jack Welch’s divorce forced his GE retirement package out into the open, it exceeded $10 million a year. If you were to probe into any large corporation you would find waste and extravagance.<\/p>\n\n\n\n With money a corporation accumulates power. While Enron was spending all that money to enrich its executives, it was also spending huge sums of money to buy influence inside the federal government. Two simple examples of the process include these:<\/p>\n\n\n\n Enron is not unusual.<\/p>\n\n\n\n On December 18, 2002 I was scheduled to fly on AirTran flight 112 from Atlanta to Raleigh-Durham International Airport. However, the flight was unexpectedly delayed and I had a couple of hours to kill before the plane would take off. I picked up a copy of USA Today<\/strong> to see what was happening in the world. There was nothing special about December 18 — it happened to be the day I was sitting idle in the Atlanta airport.<\/p>\n\n\n\n I turned to the business section and on page 1B here is what I found:<\/p>\n\n\n\n This is the type of news that USA Today could fit on a single page of the paper on a single day in late 2002.<\/p>\n\n\n\n Page 3B had the headline 6 Worldcom board members to resign. Worldcom, led by its board of directors and billionaire CEO, is the company that in 2001 announced $9 billion in accounting irregularities — lies — that had artificially inflated its revenue numbers and fraudulently sent the stock price to amazing heights. Once the lies were exposed, the stock price fell toward zero and caused the company to declare bankruptcy. Tens of thousands of employees lost their jobs in one of the largest scandals of 2001. All of the fraud occurred, one would presume, through the CEO, the executive team and the board. The departing board members received fat severance packages. The CEO and executives cashed out with billions of dollars from the stock market before share prices fell.<\/p>\n\n\n\n In all of the cases listed in USA Today on December 18, CEOs with lucrative pay packages, as well as their highly compensated senior management teams and boards, led their companies toward failure in one way or another. In each of the cases listed above, we all paid the price. First, out of our own pockets, we funded the salaries and perks of these CEOs by paying inflated prices for all the items we buy everyday. Then we paid in the lost value of our IRAs and 401(k) plans when the stock market collapsed due to executive fraud and corruption. Many of us paid a huge price by losing our jobs in companies that failed or downsized. And then, because of the all the unemployed people in the job market, we paid with downward pressure on our wages. In many cases, however, the failed CEOs and managers walked away with fat severance packages and billions of dollars from the stock market.<\/p>\n\n\n\n That is the concentration of wealth<\/a> at work. This is how our society is wired today.[See also The Concentration of Wealth Gallery<\/a>]<\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" When Enron failed it was investigated thoroughly by the media. This investigation provides visibility into corporate behavior that is rarely available. For example: Corporations spend extravagantly on their executives. “Enron filed documents in bankruptcy court that showed total cash payments of $309.8 million to a group of 144 top Enron executives during 2001. In addition, … Continue reading Corporate Example – Enron<\/span> Robotic Nation Table of Contents<\/h2>\n\n\n\n