Haven't laughed so much since granny fell out with the mangle.

You need to be in the US of A and what you do is, you buy out a rival firm. You hawk your product very, very aggressively, making sure you keep your staff well and truly screwed down. You then publish your figures after the first year of trading as the new company, but - and this is the clever bit - you take advantage of a US law that allows you to make a forecast of the gains you expect to make over the next so many years and you're allowed to include that projected profit as if it accrued in the first year of trading. Called something like 'move to market', but don't ask me why.

If you have all your wits about you, you'll get away with including the forecast profit for the next 20 years in the first year's returns. And then you do the same thing the next year. And the next. And the next. You make sure, though, that you've been bunging three quarters of the US Senate, just in case.

When you start to feel the pressure, you take advantage of another US law that says if you sell off 3% of a subsidiary, you don't have to include the debts of the subsidiary in the returns of the the parent company. This way, if you accrue a few debts for which you can't account, you just form a new company, sell off 3% and bingo, the debt has disappeared. Keeps the share market's huge stupid grin intact and lets you get on with your life.

You've also made damn sure you charged way over the odds when you sold the 3% of each of these new companies - and don't worry, even getting the new company list over 1000 will be to your advantage because hopefully it'll take centuries for anybody snooping around to make any sense of it all. This way, you can show another lovely big number on the profit side.

And you'll get away with this no problem, because by now your parent company shares are through the roof.

You then branch out into some sort of commodity supply. Even if the delivery costs are astronomical, $4 million per month would be a typical figure, you've taken the precaution of tying yourself into the delivery mechanism for twenty years, knowing full well that you don't expect to use the mechanism for more than fifteen years. You can thereby get away with declaring only one third of these astronomical costs as debt, and use the other two thirds on the profit side, on the assumption that you'll be able to make up the loss when you eventually sell off the delivery contract.

All the while, you're using auditors who are employed by companies that are looking after your accounting requirements. To be on the safe side, you also inform any that are dealing in shares, that they must push your shares, effectively to the exclusion of any others, if they want to hang onto your other business. Don't worry, you'll get away with it long enough to make your pile and get out from under.

Go international. Negotiate a deal with representatives of some God forsaken backwood in somewhere like N. Yorkshire in the UK. Make sure you use some clown fortunate enough to have been born with a silver spoon in one of his orifices as your representative. And if he also has some sort of accountancy background, all the better, because he can handle the auditing.

You've hit the jackpot, because by now, everybody loves you. You'll be the darling of every fancy trade journal and people will be falling over themselves for the privelege of being deprived of their hard earned.

Make the most of it though, because there could be a fly in the ointment. Some miserable do gooding bastard could shop you where it hurts. But, if you're doing your job properly, it'll be ages before they give up trying to convince their workmates that something is starting to stink and resort to passing their worries on to the old bill. But, and you'll just have to live with this, they probably won't have the guts to do it openly. It'll be by an anonymous tip off.

This is when timing is crucial, because if you're the least bit careless, the avalanche will bury you.

And incidentally, don't call yourself Enron because they've already tried it and come a cropper.

Who says capital punishment is a bad thing ? :-{E}

-- Anonymous, April 05, 2002

Answers

.... and don't worry because by the time you've been rumbled, as CEO you'll have banked a cool $200m or so, and anyway who really gets hurt? All the little guys who bought 100 shares when you really needed them to, that's who!

-- Anonymous, April 05, 2002

Don't you just love multi nationals, Clarky ?

Laughter is the last thing this should have generated but I could hardly believe what I was seeing and hearing. It was so effing ridiculous I thought I was watching a Carry On film.

Utterly, utterly unbelievable, if we hadn't experienced it in real life.

If there's any justice in the world at all, two people at least will rot in hell, and the sooner the better.

In future, anybody who gets away with financial murder will have 'made a skilling', to coin a phrase.

Sometimes, and more often than is good for me, I despair.

-- Anonymous, April 05, 2002

I would like to think the Enron case will cause the Regulatory Agencies - in this case the US Securities & Exchange Commission - to look very closely at the role the Company's Auditors played in this wanton rape of it's shareholders.

As in the Mirror case with Maxwell, and their auditors, Coopers & Lybrand, the Auditors have been woefully inadequate in discharging their alloted role. As the BBC programme suggested, there was a dreadful conflict-of-interest for Andersen in ther relationship with Enron. The fees generated from their audit role was peanuts compared to the money they were making from consultancy services - this is not an unusual conflict.

The accounting firms will extoll their ability to maintain a "chinese wall" between the two roles, but there is an inevitable concern about doing anything that will cause them to lose lucrative consultancy arrangements, and this inevitably results in at least a potential conflict-of-interest.

The problem here is that audit assignments generate little in the way of fees, and the accounting firms rely very heavily on income from consultancy. However, imo the Regulatory Agencies must give serious consideration to disbarring the same accounting firm fulfilling an audit role AND providing consultancy services to the same company.

-- Anonymous, April 06, 2002

That seems to be the very least that should happen.

-- Anonymous, April 06, 2002

No. Nothing much will happen. The US is a country founded on greed.

Home of the Knave and Land of the Fee.

-- Anonymous, April 06, 2002

Greed is expected Sounder, but even in the 'home of the knave' I'd be amazed and disappointed if the CEO and CFO of Enron don't go to jail.

These guys are crooks who knew precisely what they were doing in defrauding their investors.

-- Anonymous, April 07, 2002

Wakeham, the esteemed Chancellor of Brunel University visited my Dept. to get to know the troops. He gave a typically modest self- effacing little speech in which he admitted that his numeracy was severely limited to his army days when he was charged with analysing the sizes of issued army boots - which he found very difficult. We all laughed dutifully.
These special skills were used by Enron to oversee and audit their creative accounting practices for which he received around £120,000 pa Meanwhile Math Depts around the country are closing as we do not produce research with these sharp edged applications in mind or students with this special mind-set.


-- Anonymous, April 07, 2002

True - remind me to discuss the merits/demerits on many non-executive Directors some time.

In short, 'non-execs' have a specific and critical role to fill on company Boards. However, Lord Wakeham seems to be representative of a genre of non-execs who use their names to line their pockets without putting in the time and effort necessary to effectively perform their defined role, which is to represent the interests of the shareholders of a company within the Board Room.

This is indeed another issue that requires rigorous examination.

-- Anonymous, April 07, 2002