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Non-Tech : The ENRON Scandal -- Ignore unavailable to you. Want to Upgrade?

To: PartyTime who wrote (1912)	1/30/2002 8:22:43 PM
From: Mephisto	Respond to of 5185

Fastow, the CFO set up some of the offshore accounts, I believe. It is complicated. Maybe, Mark or the Duke or someone else could give you a simple explanation. I can't.

To: PartyTime who wrote (1912)	1/30/2002 9:11:45 PM
From: JBTFD	Read Replies (1) \| Respond to of 5185

I dont know who had the original idea, but what Enron did with offshore subsidiaries appears to be common practice today. The idea appealed because it enabled the company to 1: hide losses from unprofitable ventures it had invested in 2: give the impression that assets they owned were worth more than they were, and 3: hide losses it had incurred in investments in technology stocks. Bottom line is it gave financial engineers the tools they needed to make the company look financially stronger than it actually was. More alarming is 1:that these accounting practices are legal 2: the fact that the derivatives transactions involved are pretty much completely unregulated, and 3: the fact that Enron isnt alone in using these type of accounting tricks. The explanations given by Frank Partnoy are the best thing I've read on the topic, post 1903 and 1904 on this thread. It's long but well worth it if you want to understand what the hell they were up to.