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NAMES ROLL NOS.

˜ Sanyukta Bandekar 10
˜ Anju Jhangid 37
˜ Mayank Kothari
˜ Nitesh Kothari
˜ Parth Mehta 61
˜ Bhushan Purohit 75
˜ Richa Rajpal 76
˜ Lovish Sharma 93
˜ Srishti Sharma 96
˜ Avtar Singh 100
 
  

˜ Kenneth Lay founded Enron in 1985 through the


merger of Houston Natural Gas and InterNorth, two
natural gas pipeline companies.

˜ By 1992, Enron was the largest merchant of natural


gas in North America, and the gas trading business
became the second largest contributor to Enron͛s net
income, with an Earnings Before Interest and Taxes of
$122 million.
  
˜ Enron shares hit high prices mere $90

˜ After the fraud detection the share prices fell to


$0.12

˜ Large number of investors lost their money


comprising total loss of $11 bn

˜ The scandal was related to misleading the public


about the true condition of the company

˜ The debts and losses of the company was hided and


the revenues were shown increasing
     
M  
˜ ÿormer CEO of Enron, helped start the company.
˜ Enron extended to him $7.5 million revolving credit
line, which he reportedly used and repaid with Enron
stock 15 times within a period of just several months
˜ He quit as CEO in ÿebruary 2001
˜ He returned as CEO in August 2001until he resigned
on Jan. 23, 2002
˜ He quit the Enron board altogether on ÿeb. 4.
˜ Sherron Watkins said Lay was "duped" by top
executives
à  


˜ Enron's chief executive in the first half of 2001


˜ Since joining the company in 1990, Skilling helped
transform Enron from a natural-gas pipeline company
into an energy-trading powerhouse.
˜ Between January and August 2001 he sold off about
$20 million In Enron stock
˜ Resigned after the close of markets on Aug. 14 2001
˜ Being charged with conspiracy, fraud and insider
trading
Ô Ô 

˜ Enron's chief auditor at Anderson

˜ His job was to check Enron͛s accounts

˜ He is accused of ordering the shredding of


thousands of Enron-related documents in an
effort to hide them from Securities and Exchange
Commission investigators
M 

˜ ÿormer Chief ÿinancial Officer of Enron

˜ The mastermind behind the deceptive accounting


practices

˜ Lea ÿastow (his wife) also plead guilty to signing


and filing a tax return that did not include income
the ÿastow͛s had received from Mike Kopper

   

˜ Known as the "Enron whistle-blower"

˜ Was Enron's vice president of corporate


development

˜ Wrote a letter to Kenneth Lay about ͞suspicions


of accounting improprieties"

˜ Not really a ͞whistle-blower͟ because she


never went public with her suspicions
 
   
˜Enron, a majority owner of Dabhol, a massive combined-cycle power plant
on the western coast of Maharashtra state.

˜ The Dabhol power plant initiated in 1992 and took nine years to commence
operation.

˜It was the single largest foreign direct investment project in India at the
time costing nearly U.S.Dollars 3 billion
˜Enron owns 65%, Bechtel Enterprises owns 10%, General Electric owns 10%,
and the Maharashtra State Electricity Board owns 15%.
˜The project is 2,184 megawatts
˜The plant closed in June 2001, due to a payment and contract dispute
between the Maharashtra state government and the plant owners. Enron
says it incurred over $1 billion in costs for the plan"
   
˜ It was a two-phased project by Dabhol Power
Corporation (DPC)

˜ Phase I (740 MW ) began operating on naphtha in


May 1999, since Dabhol͛s LNG Terminal was not ready

˜ Phase II remained incomplete

˜ The Dabhol project was highly controversial in India


from the start, and it was associated with allegations
of malfeasance and corruption at the highest levels
  
   


˜ Between 1 and 2 M$ in hidden debts
˜ Artificial increase of stock value
˜ Co operation of Arthur Andersen
˜ No taxes paid 4 years out of 5 in the US
˜ Stock option deduction : 600 million $
˜ Dec 2000: top executives were paid 750 million $ in
bonuses whereas the declared net profit was 975
million $

  
  
˜ 29 top executives : 1M $ in stock options before
bankruptcy whereas employees were forbidden to
sell their options

˜ CEO alone : sold $ 67m worth of options

˜ 4 500 employees were laid-off. Severance package:


13 500 $ per employee

˜ 63% of the 21,000 employees lost all their pension


plan
  
  

˜ Displacement of 2 000 people and appropriation of land


without prior notification

˜ Arrest of 300 pacific protestors a day, average of 8-day


detention period, without trial and with violation of
human dignity

˜ Demonstrators, mostly women, dragged from their


homes, and beaten (lath charge, tear gassing,
helicopters), detention, humiliation, intimidation
  
  
˜ No impact study; no alternative site
˜ Mockery of consultation process
˜ Use of drinking water from population (8 300 liters
/ minute) replacement of 10% of water for villages
˜ Pollution of rivers by used waters
˜ Contamination of sea-water (down-load of 13
million liters of warm water per day)
˜ Destruction of plantations (mango, cashew) and
fisheries

   
Disputes between the :-

˜ Dabhol Power Company (DPC) and the Maharashtra


State Electricity Board (MSEB)
˜ DPC and the government of India (GoI)
˜ DPC and the Maharashtra government as well as
between the Industrial Development Bank of India-
led lenders and the offshore lenders
˜ GoI had a marginal role as a secondary obliger
˜ The total claims against GoI alone, till date, are
nearly Rs. 24,000 crore ($5.2 billion).
The legal cases involving the GoI fall into four
categories:

˜ Arbitration proceedings under the (BIPA) signed by


India with other countries;
˜ Cases of international arbitration under the (PPA)
and
˜ The GoI counter-guarantee; cases of arbitration
arising out of the erstwhile Electricity Regulatory
Commission Act as well as
˜ Cases before the Bombay and Delhi high courts and
the Supreme Court.
   
˜ Today the first phase of the power plant is idle and the
second phase remains incomplete.

˜ There have already been some companies announcing


that they are considering investing in the project, one of
them is Gaz the ÿrance.

˜ The then Bush administration started giving more


attention to its companies doing international deals.

˜ The DPC debacle follows with a number of foreign


investors pulling out of India, e.g. Electricite de ÿrance
and Cogentrix. Also Daewoo, PowerGen and National
Power have previously experienced problems in India.
  

˜ However, the lessons of Dabhol are not being


learnt :
´ No projection techniques used
´ no realistic tariff projections at all
´ Still no training for management personals on
how to negotiate

˜ The only lesson learnt is that the government is


now going for small projects.
 

˜ Use of better auditing and projection


techniques

˜ Cut down on corruption

˜ Better tariff plans

˜ Better training facilities for negotiators