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The Money Programme Wednesday, 3 April, 2002, 16:03 GMT 17:03 UK
Inside the Enron Scandal
Enron HQ Houston, Texas
Until last December, Enron bragged of being the world's biggest energy trading company. Today it is the world's biggest corporate failure. Last year it claimed to have made profits of $1bn, but now it's clear that those figures were wildly inflated. The books were cooked.

A slew of investigations by the FBI and Congressional Committees is now looking into the scandal. They're concentrating on the network of obscure subsidiaries which Enron set up over the past four years to conceal the true state of its finances.

But a Money Programme investigation in Houston and London shows that Enron started to inflate its figures over a decade ago on deals which would in reality go on to lose the company hundreds of millions of dollars. Cooking the books became part of the company culture, encouraged by a viciously competitive staff performance review system.

Management put pressure on employees to cook the books
Enron HQ Texas, where the trouble started
Executives at the top of the company made tens of millions of dollars selling Enron shares which had been inflated by the aggressive accounting techniques. Many of their former employees have lost their entire pensions. Angelina Lario, who lost $600,000 in pension and stock options, says: " I just feel like I worked for a corporation that held a bunch of crooks in the executive department".

The scandal was allowed to happen because members of the Enron board - including former British Energy Secretary Lord Wakeham, a chartered accountant - failed to spot the abuses. So too, apparently, did accountants Arthur Andersen, though some of their American staff engaged in an orgy of document shredding when it became known that regulators were investigating.

Lord Wakeham - former British Energy Secretary
Lord Wakeham failed to stop the abuses
Many top Wall Street firms invested in Enron's obscure subsidiaries, and knew they were intended to improve Enron's figures by removing debts from its balance sheet, but it was in nobody's interest to blow the whistle. Investment houses whose analysts published less than glowing reports on Enron came under enormous pressure, as their firms were cut out of lucrative Enron business. Enron spent $250 million last year alone on fees to Wall St firms.

The Money Programme tells the Enron story through the testimony of victims and insiders, who reveal how management put pressure on employees to cook the books in order to increase their own bonuses. The programme asks the question: was Enron a scam from the very start?

Reporter: Rajan Datar, Producer: David Strahan, Series Editor: Clive Edwards.

"Inside the Enron Scandal" will be shown on Thursday 4 April at 9.50pm on BBC TWO

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