The fallout from the collapse of Enron, the Houston, Texas-based energy conglomerate, continues to accumulate. Enron's spectacular implosion -- the largest bankruptcy in history -- raises questions on issues ranging from accounting rules to White House access and influence. It might be a cautionary tale of capitalism, but the human cost will be far too high to merely cast it as a modern-day fable with a suitable moral at the end.
Enron discovered that dispensing with the mundane business of running power plants and instead trading energy as a basic commodity offered it incredible rewards on stock markets. At one point, the company was valued at $101 billion, making it the seventh largest in the United States. The high flyer came crashing back to Earth last year when it admitted to some questionable accounting practices and its share price plunged. The questions scuttled a merger with another company, and Enron was forced to file for bankruptcy in December.
In brief, Enron's problems stem from accounting methods that allowed management to keep big debts -- about $1 billion -- off the books, which resulted in inflated profits, golden reviews on Wall Street and big bonuses for executives. In fact, the partnerships set up to hold the liabilities were little more than shells, headed by individuals related to or affiliated with Enron and sometimes funded indirectly by the company, but capable -- on paper -- of demonstrating the requisite distance from Enron to qualify as independent companies.