The Crooked E

An ex-employee at Enron, he was been hired

by Enron 9 months before it was collapsed. Author of the book “Anatomy Of Greed :

Unshredded Truth from an Enron Insider” The story shows us how a typical Enron

employee viewed the company’s dramatic collapse.

Who is Brian Cruver ?

Red Flags / Symptoms of Fraud

Tips and Complaint

• Bickers , analyst in New York Wall Street• Tried to get Brian to pay attention to Enron’s

Financial situation since Brian worked in Enron, especially on the limited partnership and related party transaction

• But Brian ignored his advices.

• Sharon Watkins, Enron vice president of corporate development.

• Alerted Enron CEO Kenneth Lay of irregularities of accounting practices such as booking income based on own developed stock, related parties transactions and others

• However, she was not reporting the fraud to related authorities.

Extravagant lifestyle

• Cruver, bought new car, expensive wedding plan, branded watch and television

• Changed in personalities, he become obsessed. • Aggressive compensation driven culture, contributed to dysfunctional

corporate culture, obsessed with short-term earning to maximize bonus.

Analytical anomalies

• Risk and Assessment Control(RAC) responsible for approving deals and managing Enron’s overall risk

• RAC’s independence assessment of deal’s value not match with the real value of the deal.

• Business unit not come up with real value, they inflated real deal value to meet their target bonus.

• The manager in bankruptcy department changed Cruver valuation on deal, no action taken against him.

• Peer Review Committee (PRC) created unethical culture in Enron.

Accounting anomalies

• Highly profitable company, report increased in revenue every quarter. • Stock price keep rising• How can Enron keep increasing in their profit if compared to other

companies in same industries.• Using aggressive accounting practice?

• Former CEO Jeffrey Skilling refuse to explain unusual accounting practice in Enron

• Unable to produce the balance sheet with the earning statement

• Something hidden behind it?

Unusual Behavior

• Sudden resignation of CEO Jeffrey Skilling with inappropriate reason

• Holding CEO position for 6 months, worked in Enron since year 1990

• Unable to believe that someone who was working so long to head up this company left after so short a tenure.

• Mr.Blue, worked in Enron since 80s, being transferred to another project on the other side of the world.

• Broke Enron culture, no bad news . • He involved in a report to the management

showing the pipeline problem a year before the explosion.

The roles of Arthur Anderson • Use as a symbol to show Enron follow the

code of ethic, even they owned huge amount of virtual assets

• Using the name of Arthur Anderson , to prove their integrity

• There are confusing their employee and also the public.

• In reality, there are reckless and negligence• Being place in special room, playing golf,

games, reading newspaper, they do nothing.• After announcement of resignation of Jeffrey

Skilling , Arthur Anderson audit team still sitting and playing games, no investigation carry out, they seems to be very relaxed.

• Integrity? Independence?