Timeline of the Enron scandal

From Academic Kids

Timeline of the Enron scandal:




  • February 5 Enron executives get bonus checks for millions of dollars.
Arthur Andersen auditors internally question the LJM partnerships.
Arthur Andersen tells the Enron board of directors audit committee that they have no concerns.
  • March 7 Lay and other Enron officials meet with the energy task force of Vice President Dick Cheney.
  • April 17 Enron announces a first quarter profit of $536 million.
Lay and other Enron officials meet with Vice President Dick Cheney.
  • May 5 Enron's stock price closes below $59.78, a critical point for one of the partnerships.
  • May 17 The energy task force issues its report, which endorses some of Enron's proposals.
  • June 21 Skilling is hit in the face with a pie during a visit to California.
  • July 23 Enron's stock price closes below $47, a critical point for the Raptor partnerships.
  • August 14 Citing "personal reasons," Skilling resigns as CEO. Lay replaces him, stating "Absolutely no accounting issue, no trading issue, no reserve issue, no previously unknown problem issues" are involved.
  • August 15 Sherron Watkins, a vice president for corporate development, puts a one-page letter in Lay's suggestion box, questioning Enron's accounting practices.
  • August 16 Lay discusses Skilling's departure with employees.
Lay exercises 25,000 share options at $20.78 ($519,000 total value); the stock closes at $36.25. One of Lay's lawyers states later that some of the stock was used to repay an Enron line of credit.
  • August 21 Lay emails employees, stating "one of my highest priorities is to restore investor confidence in Enron. This should result in a significantly higher stock price."
He exercises 68,620 share options at $21.56 ($1,479,477 total value); the stock closes at $36.88. One of Lay's lawyers states later that Lay never sold the shares, which are now practically worthless.
David B. Duncan, the lead partner on the Enron account for Arthur Andersen, meets with three other AA officials to discuss the Watkins call. A memo states they "agreed to consult our firm's legal adviser about what actions to take."
  • August 22 Watkins meets with Lay, giving him a seven-page letter stating that Enron may be an "elaborate accounting hoax," and advises him not to involve Vinson & Elkins, Enron's law firm, because of potential conflicts of interest.
V&E is asked if an inquiry is necessary, but told not to bother "second-guessing the accounting advice and treatment."
  • September 26 Lay tells employees that Enron's accounting practices are "legal and totally appropriate," that Enron stock is "an incredible bargain," that he and other executives have bought Enron stock in the last two months, and that "the third quarter is looking great" in an online forum.
  • October 15 Vinson & Elkins deliver a report which states that Arthur Andersen approved of Enron's accounting procedures, and that Enron did nothing wrong.
  • October 16 Enron announces a third quarter loss of $618 million.
The Enron 401(k) retirement plan is frozen for administrative changes.
The Arthur Andersen partner in charge of the Enron account, David B. Duncan tells the audit managers to comply with the Andersen document retention policy, and observes them doing so by shredding documents.
  • October 23 Lay reassures investors in a conference call, asserting there was no conflict of interest with the Raptor partnerships and that the directors on the board "continue to have the highest faith and confidence" in Fastow.
David B. Duncan organizes a meeting of the Enron account group to speed up the document destruction, according to testimony by Arthur Andersen managing director Dorsey Lee Baskin Jr..
  • October 24 Andrew Fastow is forced to leave Enron.
  • October 25 Enron sends an email to all employees and to Arthur Andersen stating that all pertinent documents should be preserved.
Lay meets with Dynegy chairman Chuck Watson.
  • November 8 Enron announces it overstated profits by $586 million over five years.
Lay calls O'Neill again, comparing Enron to Long Term Capital Management.
The S.E.C. subpoenas Arthur Andersen officials.
Nancy Temple leaves a voice message for David B. Duncan ordering the preservation of all Enron documents. His assistant sends an email to other assistants to "stop the shredding".
  • November 19 Enron announces the payment of a $690 million note is nearly due as a result of the descent of its credit rating.
  • November 29 The S.E.C. begins investigating Arthur Andersen.


  • January 10 Arthur Andersen states that it destroyed Enron documents. Congressional investigators state the destruction occurred from September to November.
  • January 14 Arthur Andersen releases communications documents detailing Nancy Temple's involvement in the document destruction.
  • January 20 On Meet the Press, Arthur Andersen CEO Joseph Berardino states the document retention policy was "not to shred documents, not to eliminate documents if you have a reasonable basis to anticipate investigation."
  • January 22 Enron executive Maureen Castaneda states that Enron had been shredding documents in its Houston headquarters the previous week.
  • May 3 Enron proposes to set up a new company temporarily called OpCo Energy Company. If approved, OpCo will have Enron's core assets, including 15,000 miles of pipeline assets, 75,000 miles of distribution assets, 6,700 megawatts of generation, and 12,000 employees. [1] (http://www.enron.com/corp/pressroom/releases/2002/ene/23-050302ReleaseLtr.html)
  • July 15 Snohomish Public Utility District sues 11 power generating and marketing companies, including Enron, for conspiring to create artificial power shortages in 2001. Snohomish PUD also cancels a $200 million purchase contract with Enron.
  • August Enron demands that Snohomish PUD pay it $122 million for cancelling its purchase contract. The PUD responds with the claim that the contract was void because Enron was involved in fraudulent business practices to drive up prices.
  • August 13 FERC launches a formal investigation into potential misconduct in the power generating and marketing industry.


  • March 17 Merrill Lynch, its four former executives and SEC agree to settle the Enron security fraud case for $80 million. It is one of the five largest penalties imposed on security-related civil cases. [2] (http://www.nytimes.com/reuters/business/business-financial-sec-merrill.html)
  • June 25 FERC upholds as binding billions of dollars in long-term contracts signed by western utilities and the state of California.
  • November 5 Voters in the Portland, Oregon metro area defeat a measure that would begin the process of converting Enron subsidiary PGE into a PUD, after both local utility companies, Portland General Electric and PacifiCorp, spend $1.9 million dollars on advertisements to defeat the measure.
  • November 18 Enron announced that it was selling its subsidiary PGE to a group of investors headed by former Oregon governor Neil Goldschmidt and funded by Texas Pacific Group for $2.35 billion. Goldschmidt had been a visible opponent of the measure to convert PGE to a Public Utility District.
  • December Enron subsidiary PGE agrees to pay $8.5 million to settle a case involving illegal trading practices, while admitting no wrongdoing. $1.3 million of the payment will go to the state of Oregon.


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