The Enron Scandal: Global Corporatism against Society

Abstract

On 2 December 2001, four days after its credit rating had been downgraded to junk bond status, the Enron Corporation of Houston, Texas, filed the biggest bankruptcy petition in the history of the United States. On the 14 March 2002, Enron’s accountants, Arthur Anderson, were indicted by a federal grand jury on the criminal charge of obstruction of justice for “knowingly, intentionally and corruptly” inducing employees to shred documents relating to Enron. Enron was thus both a stock market bubble that burst and a perpetrator of frauds that involved the complicity of many outside the company itself. The fraud element turned Enron from a flagship of the “new economy” into a “corporate scandal,” the first of several. By the end of 2002, the distinction of being the United States’ biggest bankrupt company had passed to the telecoms giant, Worldcom. When Worldcom’s accounting fraud was originally identified in June 2002, its scale was estimated at $3.8 billion. Six months later it was clear that the misreporting was vastly higher, a staggering $9 billion. The New York Times headlined the affair thus: “The Latest Corporate Scandal is Stunning, Vast and Simple” (Eichenwald and Romero 2002).