It’s been 20 years, to the day, since Enron Corp. filed for bankruptcy, marking one of the most spectacular financial collapses in history and forever cementing its legacy as the posterchild of corporate fraud.
The energy-trading giant’s downfall, triggered by revelations of shady accounting practices, still reverberate throughout the business and political world today. The deceptive practices of its executives, some of whom served jailtime, helped spur the passage of federal laws and regulations designed to improve the accuracy of financial reporting.
Enron’s misdeeds in energy—its traders were found to have manipulated California’s recently deregulated electricity market, helping spark a crisis that led to sky-high power prices and rotating blackouts—ultimately led to the downfall of the state’s governor. The name Enron is still invoked in shorthand—like Theranos, Madoff or Lehman—a full two decades after its public ruin. It even inspired a limited-run Broadway show.
“They had the smartest guys in the room and then it blew up,” said Michael Webber, a University of Texas at Austin professor who specializes in energy, adding that Enron’s failure rippled through a host of institutions. “They were a bowling ball that knocked down a lot of bowling pins.”
Formed in 1985, Enron rose to prominence throughout the 1990s as an energy supplier and trading powerhouse with far-flung holdings including natural gas pipelines and utilities. But things went off the rails as executives put together obscure financial instruments that ultimately became ticking time bombs.
As the company unraveled, it was forced to write off more than $1 billion of failed investments, disclose major losses in shareholder equity because of dealings with affiliated partnerships and restate years of earnings. When it filed for bankruptcy on Dec. 2, 2001, it was at the time the largest-ever Chapter 11 case in history, costing shareholders billions and leaving thousands of people pensionless and out of work.
Here’s a look at some of the prominent players in the scandal—both fallen executives and those who investigated them—and where they are now:
Kenneth Lay, founder, former chairman and CEO
Lay founded Enron with the merger of two regional natural gas pipeline companies and, during the subsequent 16 years, transformed the Wall Street darling into America’s most famous example of corporate greed and corruption. He was indicted in 2004 by a grand jury for his role in wide-ranging schemes to defraud the public and accused by regulators of reaping more than $90 million in ill-gotten gains from selling stock. A jury convicted him but charges were dropped after he died at the age of 64 in July 2006 while vacationing, just months before his sentencing was slated to take place.
Jeffrey Skilling, former president and COO