Issue: Collapse of company
Almost two months after the problems of the former telecoms and
equipment giant Marconi, City and business commentators were once again
reaching for their best collective hyperbole as they reported the
downfall of Enron, another global giant: 'Britain had Marconi, the US
has got Enron' (The Independent, 1/12).
This was the 'mightiest fall' said The Mirror (1/12) - a 'spectacular
collapse' added The Sunday Times (2/12).
The Daily Express (30/11) was not alone in describing energy trader
Enron's collapse as the 'biggest corporate disaster of the 21st
In just a few weeks the company had gone from 'one of America's biggest
and most influential' (CNN.com, 3/12) to filing for bankruptcy after its
smaller rival Dynegy pulled the plug on the merger deal that would have
proved Enron's lifeline.
'The crippled company unravelled with stunning speed' (iwon.com, 3/12)
when discrepancies in its accounts sparked an investigation by US
financial watchdogs and the rescue bid collapsed.
'It's another Nick Leeson' one expert declared in The Observer (2/12),
while shockwaves of the stricken company's precipitous slide
reverberated around the world and the exposure of UK banks was
After a day or two of 'no comment', Barclays Bank stepped in to allay
fears with a statement that losses were 'not material' (The Guardian,
While the former powerhouse's reputation lay in tatters, there was
little reported comment from Enron itself.
The company filed for bankruptcy as it also announced legal action
against Dynegy. Only then was a statement from chairman and CEO Ken Lay
disseminated, stating that 'steps were being taken to help preserve
capital, stabilise our business and enhance our confidence to pay our
creditors' (BBC Online, 3/12).
The damage had already been done, with charges of 'exceptional
incompetence' (The Observer, 2/12) levelled at Enron's management.
As with Marconi, the power company's implosion was 'a tale of corporate
greed and hubris' (The Sunday Times, 2/12) but, unlike the
not-quite-finished story of Marconi, it seems the stricken energy giant
is headed for black-out.
As The Observer (2/12) declared, 'Enron, the Elvis of the corporate
world, really is dead'.
Analysis and commentary by Echo Research. More information can be found