It is now a commonplace of financial engineering that its instruments can be used to get round regulations and other operational constraints, such as banks’ credit limits to particular borrowers. Enron made extensive use of derivatives for these purposes, and perhaps more importantly to reduce the transparency of its financial reports..
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The numerous investigations into the current sensational corporate failures will expose many of the same operations control weaknesses that led to the collapse of the Barings Bank of London. When the smoke finally clears from the recent corporate collapses, the image in the mirror may not be an Enron or a World Com but it could be the infamous shortfalls in operations risk management that appear not only to be at the core of the failures but are reminiscent of the factors leading to the Barings Bank debacle. Though the culprit in the Barings case, Nick Leeson, was several layers below the top executives in the recent catastrophes, poor operations risk controls allowed him to commit frauds similar to what we’re seeing today..
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Let’s just say the 21st century didn’t launch smoothly for the financial markets. To be sure, in the wake of Enron and WorldCom, the public was dizzied and disenchanted with each new story of corporate misconduct. That dismay was particularly severe when news broke about the procurement scandal involving the Boeing Company. One of the largest manufacturing and defense contractors in the world, Boeing was entrusted with some of the most significant and sensitive government contracts. It was a darling of US enterprise, a poster child of industrial ingenuity. Nevertheless, in 2006, the company paid $615 million to settle government investigations into allegations that the company’s top leadership had failed to properly oversee operations. Click here to read more…
Filed under Assorted, Aviation Sector, Industry Specific Cases
In early 2001, California experienced an energy shortage of unparalleled and historic significance. At the time, California utilities were privately aware of the now-well-known fact that Enron and others were artificially manipulating the newly-deregulated power industry. However, finding a receptive audience for artificial demand-generated price increases was impossible. Southern California Edison and others in the State faced rapid, irreversible bankruptcy.
So, conflicting public explanations of the shortage’s root causes led to the universally-accepted belief that California’s two major utilities–of which Southern California Edison (SCE) is one–caused the problem. While not true, this crisis and its politically-charged implications severely weakened the relationships SCE had previously built with residential and business customers. Two things were clear: the only immediate solution to the crisis was to have citizens conserve electricity, and SCE needed new communications methods to strengthen customer satisfaction and relationships. SCE needed to develop an integrated strategic plan for educating California customers on energy efficiency and improve its customers’ overall satisfaction and perception at the same time. Click here to read more…
Filed under Concepts, Corporate Social Responsibility, Energy Management
Improving Graph-Walk Based Similarity with Re-ranking: Relational or semi-structured data is naturally represented by a graph, where nodes denote entities and directed typed edges represent the relations between them. Such graphs are heterogeneous in the sense that they describe different types of objects and links. We represent personal information as a graph that includes messages, terms, persons, dates and other object types, and relations like sent-to and has-term. Given the graph, we apply finite random graph walks to induce a measure of entity similarity, which can be viewed as a tool for performing search in the graph.
Experiments conducted using personal email collections derived from the Enron corpus and other corpora show how the different tasks of alias finding, threading and person name disambiguation can be all addressed as search queries in this framework, where the graph-walk based similarity metric is preferable to alternative approaches, and further improvements are achieved with learning. While researchers have suggested to tune edge weight parameters to optimize the graph walk performance per task, we apply reranking to improve the graph walk results, using features that describe highlevel information such as the paths traversed in the walk. Click here to read more…
Corporate governance has been the hot topic in recent times following widespread publicity of corporatescandals around the world and even in Singapore. Big names like Enron, WorldCom, China Aviation Oil oreven individuals such as Jeffery Skilling and Chen Jiulin “enjoyed” celebrity-like coverage by the media. Globally, governments and regulatory bodies are prescribing new rules and guidelines to preserve public interest and restore trust and corporate integrity.
This report aims to discuss the Code of Corporate Governance, hereinafter referred to as “The Code”, whichhad been established since 2002 by the Council of Corporate Disclosure and Governance (CCDG). The report will examine the key principles of the Code seen through “bad” cases like China Aviation Oil and Barings Bank, as well as good practices adopted by listed companies such as Qian Hu Corporation Ltd and Keppel Corporation Ltd.
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Filed under Corporate Governance
The case by Harvard Business School deals with a mega power Project turning into a leading international investment disaster. The project worth$2.9billion was a mamoth disaster by late 2001.The various shareholders were Enron,MSEB,GOM and Overseas Private Investment Corporation(OPIC).The case deals with waht and how went wrong and various other attributes related to same. Go throught the case to understand how even Titanic(BIG PROJECTS) can sink in the calm seas…click here for entire case study
Filed under Business, Scams and Scandals
Little remains to be said about the rise and scandalous fall of Texan energy giant Enron. In the relatively short space of 15 years, Enron rose from nowhere to become the seventh largest company in the United States, and the most well-known energy supplier in the world. It boasted over 21,000 employees and had a presence in more than 40 countries. Read more to know….
Filed under Brand Failure, Marketing
[youtube]http://www.youtube.com/watch?v=7g_d-phoUrU[/youtube]Verizon Communications acquired MCI/WorldCom and SBC Communications acquired AT&T Corporation, which had been in business since the 19th Century. The acquisition of MCI/WorldCom was the direct result of the behavior of WorldCom’s senior managers as documented above. While it can be argued that the demise of AT&T Corp. was not wholly attributable to WorldCom’s behavior, AT&T Corp.’s decimation certainly was facilitated by the events surrounding WorldCom, since WorldCom was the benchmark long distance telephone and Internet communications service provider. Indeed, the ripple effect of WorldCom’s demise goes far beyond one company and several senior managers. It had a profound effect on an entire industry. Read more…
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Enron brings to mind the collapse of the seventh largest company in the United States of America and the largest bankruptcy seen by the country till date. Its stock was valued at $90 per share in 2001 and is worth almost nothing at the end of the same year.[1] The downward spiral that began since Enron’s accounting fraud was exposed affected all their shareholders and employees. Billions of dollars were lost and thousands of jobs were mislaid. Following this debacle, the US authorities have analyzed the situation and have attempted at undoing the wrong in a variety of ways. We will summarize the efforts made by the US authorities in rectifying the discrepancies in the regulations of business practices in corporate America.
complete caseEnron
[youtube] http://www.youtube.com/watch?v=Uxd9AeXft64[/youtube]
Filed under Business Ethics, Corporate Governance