Editing Enron (section)

==History==
===Pre-merger origins (1925–1985)===
====InterNorth====
One of Enron's primary predecessors was [[InterNorth]], which was formed in 1930, in [[Omaha, Nebraska]], just a few months after [[Wall Street Crash of 1929|Black Tuesday]]. The low cost of [[natural gas]] and the cheap supply of labor during the [[Great Depression]] helped to fuel the company's early beginnings, doubling in size by 1932. Over the next 50 years, Northern expanded even more as it acquired many energy companies. It was reorganized in 1979 as the main subsidiary of a [[holding company]], InterNorth, a diversified energy and energy-related products firm. Although most of the acquisitions conducted were successful, some ended poorly. InterNorth competed with [[Cooper Industries]] unsuccessfully over a hostile takeover of [[Crouse-Hinds Company]], an electrical products manufacturer. Cooper and InterNorth feuded in numerous suits during the takeover that were eventually settled after the transaction was completed. The subsidiary Northern Natural Gas operated the largest pipeline company in North America. By the 1980s, InterNorth became a major force for natural gas production, transmission, and marketing as well as for [[natural gas liquids]], and was an innovator in the [[plastics industry]].<ref name=":3">{{cite web|url=http://www.referenceforbusiness.com/history2/57/Enron-Corporation.html|title=Enron Corporation – Company Profile, Information, Business Description, History, Background Information on Enron Corporation|website=referenceforbusiness.com|access-date=July 13, 2016}}</ref> In 1983, InterNorth merged with the Belco Petroleum Company, a [[Fortune 500]] oil exploration and development company founded by [[Arthur Belfer]].<ref name=Funding>{{cite web|url=http://www.fundinguniverse.com/company-histories/belco-oil-gas-corp-history/|title=Funding Universe: History of Belco Oil & Gas Corp|access-date=September 21, 2017}}</ref>

====Houston Natural Gas====
The [[Houston Natural Gas]] (HNG) corporation was initially formed from the Houston Oil Co. in 1925 to provide gas to customers in the Houston market through the building of [[Pipeline transport|gas pipelines]]. Under the leadership of CEO Robert Herring from 1967 to 1981, the company took advantage of the unregulated Texas natural gas market and the commodity surge in the early 1970s to become a dominant force in the energy industry. Toward the end of the 1970s, HNG's luck began to run out with rising gas prices forcing clients to switch to oil. In addition, with the passing of the [[Natural Gas Policy Act of 1978]], the Texas market was less profitable and as a result, HNG's profits fell. After Herring died in 1981, M.D. Matthews briefly took over as CEO in a 3-year stint with initial success, but ultimately, a big dip in earnings led to his exit. In 1984, [[Kenneth Lay]] succeeded Matthews and inherited the troubled conglomerate.<ref>{{cite book|title=Edison to Enron: Energy Markets and Political Strategies|last=Bradley|first=Robert L.|publisher=Scrivener|year=2011|isbn=978-0470917367|pages=371–372, 464–467}}</ref>

====Merger====
With its conservative success, InterNorth became a target of corporate takeovers, the most prominent originating with [[Irwin L. Jacobs|Irwin Jacobs.]]<ref name=":0">{{Cite book|title=A Financial History of Modern U.S. Corporate Scandals from Enron to Reform|last=Markham|first=Jerry W.|publisher=Routledge|year=2006|isbn=0765615835|via=Credo Reference}}</ref> InterNorth CEO Sam Segnar sought a friendly merger with HNG. In May 1985, Internorth acquired HNG for $2.3 billion, 40% higher than the current market price, and on July 16, 1985, the two entities voted to merge.<ref name=":1">{{Cite web|url=http://www.sjsu.edu/faculty/watkins/enron.htm|title=The Rise and Fall of Enron|last=Watkins|first=Thayer|website=San Jose State University|access-date=July 13, 2016|archive-date=August 5, 2020|archive-url=https://web.archive.org/web/20200805181220/https://www.sjsu.edu/faculty/watkins/enron.htm|url-status=dead}}</ref> The combined assets of the two companies created the second largest gas pipeline system in the US at that time.<ref name=":2">{{Cite web|url=https://tshaonline.org/handbook/online/articles/doe08|title=Enron Corporation|last=Frontain|first=Michael|date=June 12, 2010|website=Texas State Historical Association|access-date=July 13, 2016}}</ref> Internorth's north–south pipelines that served Iowa and Minnesota complemented HNG's Florida and California east-west pipelines well.<ref name=":1" />

===Post-merger rise (1985–1991)===
[[File:1400SmithDowntown.jpg|thumb|[[1400 Smith Street]], the former headquarters of Enron in Downtown Houston, Texas (now occupied by [[Chevron Corporation]])]]

The company was initially named '''HNG/InterNorth Inc.''', even though InterNorth was technically the parent.<ref name=":2" /> At the outset, Segnar was CEO but was soon fired by the board of directors to name Lay to the post. Lay moved its headquarters back to Houston and set out to find a new name, spending more than $100,000 in focus groups and consultants in the process. [[Lippincott & Margulies]], the advertising firm responsible for the InterNorth identity five years prior, suggested "Enteron". During a meeting with employees on February 14, 1986, Lay announced his interest in this name change, which would be held to a stockholder vote on April 10. Less than a month from this meeting, on March 7, 1986, a spokesman for HNG/InterNorth rescinded the planned Enteron proposal, as since its announcement the name had come under scrutiny for being the same as [[wikt:enteron|a medical term for the intestines]]. This same press release saw the introduction of the Enron name, which would be the new name voted on come April.<ref name=":0" /><ref name=":1" />

Enron still had some lingering problems left over from its merger, however, the company had to pay Jacobs, who was still a threat, over $350 million and reorganize the company.<ref name=":0" /> Lay sold off any parts of the company that he believed didn't belong in the long-term future of Enron. Lay consolidated all the gas pipeline efforts under the Enron Gas Pipeline Operating Company. In addition, it ramped up its electric power and natural gas efforts. In 1988 and 1989, the company added power plants and [[cogeneration]] units to its portfolio. In 1989, [[Jeffrey Skilling]], then a consultant at [[McKinsey & Company]], came up with the idea to link natural gas to consumers in more ways, effectively turning natural gas into a commodity. Enron adopted the idea and called it the "Gas Bank". The division's success prompted Skilling to join Enron as the head of the Gas Bank in 1991.<ref name=":2" /> Another major development inside Enron was a pivot to overseas operations with a $56 million loan in 1989 from the [[Overseas Private Investment Corporation]] (OPIC) for a power plant in Argentina.

====Timeline (1985–1992)====
=====1980s=====
* New regulations gradually create a market-pricing system for natural gas. [[Federal Energy Regulatory Commission]] (FERC) Order 436 (1985) provides blanket approval for pipelines that choose to become common carriers transporting gas intrastate. FERC Order 451 (1986) deregulates the wellhead, and [[FERC Order 490]] (April 1988) authorizes producers, pipelines, and others to terminate gas sales or purchases without seeking prior FERC approval. As a result of these orders, more than 75% of gas sales are conducted through the spot market, and unprecedented market volatility exists.<ref name="fusaro" />

======July 1985======
* [[Houston]] Natural Gas, run by [[Kenneth Lay]] merges with InterNorth, a natural gas company in [[Omaha]], Nebraska, to form an interstate and intrastate natural gas pipeline with approximately {{Convert|37000|mi|abbr=on}} of pipeline.<ref name="fusaro">Fusaro, Peter C, ''What went wrong with Enron''. J Wiley & Sons 2002</ref>

======November 1985======
* Lay is appointed chairman and chief executive of the combined company. The company chooses the name Enron.<ref name="loren" />

=====1986=====
* Company moves headquarters to Houston, where Ken Lay lives. Enron is both a natural gas and oil company.
* ''Enron's vision:'' To become the premier natural gas pipeline in America.<ref name="mimi">Mimi Swartz, Sherron Watkins, ''Power Failure: The Inside Story of the Collapse of Enron'' (Doubleday, 2003) {{ISBN|0-385-50787-9}}.</ref>

=====1987=====
* Enron Oil, Enron's petroleum marketing operation, reports a loss of $85 million in 8-K filings. True loss of $142–190 million is concealed until 1993. Two top Enron Oil executives in [[Valhalla, New York]], plead guilty to charges of fraud and filing false tax returns. One serves time in prison.<ref name="fusaro" />

=====1988=====
* The company's major strategy shift – to pursue unregulated markets in addition to its regulated pipeline business – is decided in a gathering that became known as the ''Come to Jesus'' meeting.<ref name="loren">Loren Fox, ''Enron: The Rise and Fall''. (Hoboken, N.J.: Wiley, 2003).</ref>
* Enron enters the UK energy market following the privatization of the electricity industry there. It becomes the first U.S. company to construct a power plant, [[Teesside Power Station]], in Great Britain.<ref name="fusaro" />

=====1989=====
* Enron launches ''Gas Bank'', later run by [[CEO]] [[Jeffrey Skilling|Jeff Skilling]] in 1990, which allows gas producers and wholesale buyers to purchase gas supplies and [[Hedge (finance)|hedge]] the price risk at the same time.<ref name="loren" />
* Enron begins offering financing to oil and gas producers.<ref name="fusaro" />
* [[Transwestern Pipeline|Transwestern Pipeline Company]], owned by Enron at that time, is the first merchant pipeline in the US to stop selling gas and become a transportation-only pipeline.<ref name="fusaro" />

=====1990=====
* Enron launches plan to expand US natural gas business abroad.<ref name="fusaro" />
* Enron becomes a natural gas market maker. Begins trading [[futures contract|futures]] and [[option (finance)|option]]s on the [[New York Mercantile Exchange]] and over-the-counter market using financial instruments such as [[swap (finance)|swap]]s and [[option (finance)|option]]s.<ref name="fusaro" />
* Ken Lay and Rich Kinder hire Jeff Skilling from [[McKinsey & Company]] to become CEO of ''Enron Gas Services'', Enron's "Gas Bank". Enron Gas Services eventually morphs into ''Enron Capital and Trade Resources'' (ECT).<ref name="fusaro" />
* Jeff Skilling hires [[Andrew Fastow]] from the banking industry; he starts as account director and quickly rises within the ranks of ECT.<ref name="fusaro" />

=====1991=====
* Enron adopts [[mark-to-market accounting]] practices, reporting income and value of assets at their replacement cost.<ref name="fusaro" />
* [[Rebecca Mark]] becomes chairman and CEO of Enron Development Corp., a unit formed to pursue international markets.<ref name="mimi" />
* Andy Fastow forms the first of many off-balance-sheet partnerships for legitimate purposes. Later, off-balance-sheet partnerships and transactions will become a way for money-losing ventures to be concealed and income reporting to be accelerated.<ref name="fusaro" />{{efn| In September 1999, Fastow pitched a partnership between Enron and [[Merrill Lynch]] to provide $390 million in outside investments for the Fastow controlled private partnership known as the [[LJM (company)|LJM2 Co-Investment LP]].<ref>{{cite news |last=Johnson |first=Carrie |url=https://www.washingtonpost.com/archive/business/2002/07/31/enron-pact-troubled-merrill-employee/1e723c71-f746-46a8-a95c-9d4faaf1ac95/ |title=Enron Pact Troubled Merrill Employee |newspaper=[[Washington Post]] |date=July 31, 2001 |access-date=August 9, 2023 |archive-date=August 9, 2023 |archive-url=https://archive.today/20230809202316/https://www.washingtonpost.com/archive/business/2002/07/31/enron-pact-troubled-merrill-employee/1e723c71-f746-46a8-a95c-9d4faaf1ac95/}}</ref> The then Enron Treasurer Jeff McMahon would book a $12 million gain and meet its earnings target for 1999 with a $7 million investment from Merrill Lynch for a stake in three floating power generators off Nigeria. In July 2000, Merrill Lynch sold its stake in three floating power generators off Nigeria to the Fastow-controlled LJM2 to place the venture off the books.<ref>{{cite news |last=Ivanovich |first=David |url=https://www.chron.com/business/enron/article/early-on-exec-saw-enron-deal-as-risk-2063208.php |title=Early on, exec saw Enron deal as risk |work=[[Houston Chronicle]] |date=July 31, 2002 |access-date=August 9, 2023 |archive-date=August 9, 2023 |archive-url=https://archive.today/20230809202208/https://www.chron.com/business/enron/article/early-on-exec-saw-enron-deal-as-risk-2063208.php}}</ref> In August 2001, [[Sherron Watkins]] informed [[Ken Lay]] that the Fastow partnerships could cause Enron to "implode in a wave of accounting scandals." Lay requested that Watkins and Elizabeth A. Tilney, whose investment banker husband Schuyler Tilney is a managing director and head of the energy investment banking unit at Merill Lynch and a close personal friend of Andrew S. Fastow and his wife [[Lea Fastow|Lea]], develop a crisis management strategy.<ref name=NYT31072002>{{cite news |last=Barboza |first=David |url=https://www.nytimes.com/2002/07/31/business/corporate-conduct-close-links-merrill-banker-had-many-direct-ties-to-enron.html |title=CORPORATE CONDUCT: CLOSE LINKS; Merrill Banker Had Many Direct Ties to Enron |work=[[New York Times]] |date=July 31, 2002 |access-date=August 9, 2023 |archive-date=August 9, 2023 |archive-url=https://archive.today/20230809203009/https://www.nytimes.com/2002/07/31/business/corporate-conduct-close-links-merrill-banker-had-many-direct-ties-to-enron.html}}</ref> In 1993, Schuyler Tilney joined Merrill Lynch and previously he had been employed at [[Credit Suisse First Boston|CS First Boston]] during which CS First Boston invested heavily in the [[Boris Jordan|privatization of Russia]].<ref name=NYT31072002/><ref name=Bloomberg1995>{{cite news |last=Kranz |first=Patricia |url=https://www.bloomberg.com/news/articles/1995-05-21/boris-jordan-the-man-who-made-moscows-market |title=Boris Jordan: The man who made Moscow's Market |work=[[Businessweek]] |date=May 22, 1995 |access-date=August 9, 2023 |archive-date=June 6, 2021 |archive-url=https://archive.today/20210606010753/https://www.bloomberg.com/news/articles/1995-05-21/boris-jordan-the-man-who-made-moscows-market}}</ref><ref>{{cite news |last=Апраксин |first=Григорий (Apraksin, Grigory) |url=http://www.flb.ru/iw0023.html |title=Тихий американец или 5 российских скандалов из жизни Бориса Йордана |trans-title=The Quiet American or 5 Russian scandals from the life of Boris Jordan |language=ru |work=[[:ru:Агентство федеральных расследований|Free Lance Bureau]] (flb.ru) |date=December 29, 1999 |access-date=August 9, 2023 |archive-date=November 22, 2001 |archive-url=https://web.archive.org/web/20011122044058/http://www.flb.ru/iw0023.html}}</ref>}}

=====1992=====
* Enron acquires [[Transportadora de Gas del Sur]].<ref name="fusaro" />

===1991–2000===
Throughout the 1990s, Enron made a few changes to its business plan that greatly improved the perceived profitability of the company. First, Enron invested heavily in overseas assets, specifically energy. Another major shift was the gradual transition of focus from a producer of energy to a company that acted more like an investment firm and sometimes a [[hedge fund]], making profits off the margins of the products it traded. These products were traded through the Gas Bank concept, now called the Enron Finance Corp. and headed by Skilling.<ref name=":0" />

====Operations as a trading firm====
With the success of the Gas Bank trading natural gas, Skilling looked to expand the horizons of his division, Enron Capital & Trade. Skilling hired Andrew Fastow in 1990 to help.

====Entrance into the retail energy market====
Starting in 1994 under the [[Energy Policy Act of 1992]], Congress allowed states to deregulate their electricity utilities, allowing them to be opened for competition. California was one such state to do so. Enron, seeing an opportunity with rising prices, was eager to jump into the market. In 1997, Enron acquired [[Portland General Electric]] (PGE). Although an Oregon utility, it had the potential to begin serving the massive California market since PGE was a regulated utility. The new Enron division, Enron Energy, ramped up its efforts by offering discounts to potential customers in California starting in 1998. Enron Energy also began to sell natural gas to customers in Ohio and wind power in Iowa. However, the company ended its retail endeavor in 1999 as it was revealed it was costing upwards of $100 million a year.<ref name=":3" /><ref name=":0" /><ref name=":2" />

====Data management====
As fiber optic technology progressed in the 1990s, multiple companies, including Enron, attempted to make money by "keeping the continuing network costs low", which was done by owning their own network.<ref name="NYT1999">{{cite news|last1=Schiesel|first1=Seth|title=Jumping Off the Bandwidth Wagon|url=https://www.nytimes.com/1999/07/11/business/jumping-off-the-bandwidth-wagon.html|access-date=February 17, 2017|work=[[The New York Times]]|date=July 11, 1999}}</ref> In 1997, FTV Communications LLC, a [[limited liability company]] formed by Enron subsidiary FirstPoint Communications, Inc., constructed a {{convert|1,380|mi}} fiber optic network between Portland and Las Vegas.<ref name=PRNEWS>{{cite news|title=Montana Power, Williams Communications, Enron Units Announce Fiber Providers for Portland-to-Los Angeles Network|url=http://www.prnewswire.com/news-releases/montana-power-williams-communications-enron-units-announce-fiber-providers-for-portland-to-los-angeles-network-77921802.html|access-date=February 17, 2017|work=[[PRNewswire]]|date=December 17, 1997|language=en|archive-url=https://web.archive.org/web/20170217071349/http://www.prnewswire.com/news-releases/montana-power-williams-communications-enron-units-announce-fiber-providers-for-portland-to-los-angeles-network-77921802.html|archive-date=February 17, 2017|url-status=dead}}</ref> In 1998, Enron constructed a building in a rundown area of Las Vegas near E Sahara, right over the "backbone" of fiber optic cables providing service to technology companies nationwide.<ref name="NPR04">{{cite news|title=Profiting from Enron Bankruptcy|url=https://knpr.org/knpr/2004-11/profiting-enron-bankruptcy|access-date=February 17, 2017|work=[[Nevada Public Radio]]|date=November 29, 2004|language=en}}</ref> The location had the ability to send "the entire Library of Congress anywhere in the world within minutes" and could stream "video to the whole state of California".<ref name="NPR04"/> The location was also more protected from natural disasters than areas such as Los Angeles or the East Coast.<ref name="NPR04"/> According to ''Wall Street Daily'', "Enron had a secret", it "wanted to trade bandwidth like it traded oil, gas, electricity, etc. It launched a secret plan to build an enormous amount of fiber optic transmission capacity in Las Vegas&nbsp;... it was all part of Enron's plan to essentially own the internet."<ref name="WSdaily">{{cite news|last1=Miller|first1=Greg|title=SUPERNAP: The World's Most Advanced Data Center|url=https://www.wallstreetdaily.com/2015/09/11/supernap-data-center/|access-date=February 17, 2017|work=Wall Street Daily|date=September 11, 2015|archive-url=https://web.archive.org/web/20170218065430/https://www.wallstreetdaily.com/2015/09/11/supernap-data-center/|archive-date=February 18, 2017|url-status=dead}}</ref> Enron sought to have all US internet service providers rely on their Nevada facility to supply bandwidth, which Enron would sell in a fashion similar to other commodities.<ref name="REG2008">{{cite news|last=Vance|first=Ashlee|author-link=Ashlee Vance|title=Welcome to Las Vegas – Home of the technology superpower you've never heard of|url=https://www.theregister.co.uk/2008/05/24/switch_switchnap_rob_roy/?page=3|access-date=February 19, 2017|work=[[The Register]]|date=May 24, 2008}}</ref>

In January 2000, Kenneth Lay and Jeffrey Skilling announced to analysts that they were going to open trading for their own "high-speed fiber-optic networks that form the backbone for Internet traffic". Investors quickly bought Enron stock following the announcement "as they did with most things Internet-related at the time", with stock prices rising from $40 per share in January 2000 to $70 per share in March, peaking at $90 in the summer of 2000. Enron executives obtained [[windfall gain]]s from the rising stock prices, with a total of $924 million of stocks sold by high-level Enron employees between 2000 and 2001. The head of Enron Broadband Services, Kenneth Rice, sold 1 million shares himself, earning about $70 million in returns. As prices of existing fiber optic cables plummeted due to the vast oversupply of the system, with only 5% of the 40 million miles being active wires, Enron purchased the inactive "dark fibers", expecting to buy them at low cost and then make a profit as the need for more usage by internet providers increased, with Enron expecting to lease its acquired dark fibers in 20-year contracts to providers. However, Enron's accounting would use estimates to determine how much their dark fiber would be worth when "lit" and apply those estimates to their current income, adding exaggerated revenue to their accounts since transactions were not yet made and it was not known if the cables would ever be active. Enron's trading with other energy companies within the broadband market was its attempt to lure large telecommunications companies, such as [[Verizon Communications]], into its broadband scheme to create its own new market.<ref name="WPjan01">{{cite news|last=Behr|first=Peter|title=Broadband Strategy Got Enron in Trouble; Bid to Create Market for Fiber-Optic Space Included Aggressive Accounting|newspaper=[[The Washington Post]]|issue=E01|date=January 1, 2001}}</ref>

By the second quarter of 2001, Enron Broadband Services was reporting losses. On March 12, 2001, a proposed 20-year deal between Enron and [[Blockbuster Inc.]] to stream [[Video on demand|movies on demand]] over Enron's connections was canceled, with Enron shares dropping from $80 per share in mid-February 2001 to below $60 the week after the deal was killed. The branch of the company that Jeffrey Skilling "said would eventually add $40 billion to Enron's stock value" added only about $408 million in revenue for Enron in 2001, with the company's broadband arm closed shortly after its meager second-quarter earnings report in July 2001.<ref name="WPjan01"/>

Following the bankruptcy of Enron, telecommunications holdings were sold for "pennies on the dollar".<ref name="NPR04"/> In 2002, Rob Roy of [[Switch (company)|Switch Communications]] purchased Enron's Nevada facility in an auction attended only by Roy. Enron's "fiber plans were so secretive that few people even knew about the auction." The facility was sold for only $930,000.<ref name="NPR04"/><ref name="WSdaily"/> Following the sale, Switch expanded to control "the biggest data center in the world".<ref name="WSdaily"/>

====Overseas expansion====
Enron, seeing stability after the merger, began to look overseas for new possible energy opportunities in 1991. Enron's first such opportunity was a [[Teesside power station|natural gas power plant]] utilizing cogeneration that the company built near [[Middlesbrough]], UK.<ref name=":3" /><ref name=":1" /> The power plant was so large it could produce up to 3% of the United Kingdom's electricity demand with a capacity of over 1,875 [[megawatts]].<ref>{{cite web|url=http://www.engineering-timelines.com/scripts/engineeringItem.asp?id=991|title=Teesside Power Station |publisher=Engineering Timelines |access-date=July 27, 2016}}</ref> Seeing the success in England, the company developed and diversified its assets worldwide under the name of Enron International (EI), headed by former HNG executive [[Rebecca Mark-Jusbasche|Rebecca Mark]]. By 1994, EI's portfolio included assets in The Philippines, Australia, Guatemala, Germany, France, India, Argentina, the Caribbean, China, England, Colombia, Turkey, Bolivia, Brazil, Indonesia, Norway, Poland, and Japan. The division was producing a large share of earnings for Enron, contributing 25% of earnings in 1996. Mark and EI believed the [[water industry]] was the next market to be deregulated by authorities. Seeing the potential, they searched for ways to enter the market, similar to PGE.

During this period of growth, Enron introduced a new corporate identity on January 14, 1997, and from that point adopted their distinctive tricolor E logo. This logo was one of the final projects of legendary graphic designer [[Paul Rand]] before his death in 1996, and debuted almost three months after his departure.<ref>{{Cite news|url=https://www.bostonglobe.com/arts/2015/04/08/looking-back-designs-paul-rand/hjnIvMIwXxYThxjmDXhnZM/story.html|title=Looking back at the designs of Paul Rand – The Boston Globe|last=Feeney|first=Mark|date=April 8, 2015|work=BostonGlobe.com|access-date=March 7, 2018}}</ref><ref>{{Cite book|url=https://archive.org/details/conspiracyoffool00kurt/page/137|title=Conspiracy of fools : a true story|last=Eichenwald|first=Kurt|date=2005|publisher=Broadway Books|isbn=9780767911795|edition=1st trade paperback|location=New York|pages=[https://archive.org/details/conspiracyoffool00kurt/page/137 137]|oclc=62936217}}</ref><ref>{{Cite news|url=https://designobserver.com/feature/the-smartest-logo-in-the-room/6237|title=The Smartest Logo in the Room|last=Bierut|first=Michael|date=February 11, 2008|work=Design Observer|access-date=March 7, 2018|language=en}}</ref>

In 1998, Enron International acquired [[Wessex Water]] for $2.88 billion.<ref>{{Cite web|url=https://www.theguardian.com/business/2002/nov/05/corporatefraud.enron|title=How Enron's great water adventure ended in tears|date=November 5, 2002|website=The Guardian|access-date=July 27, 2016}}</ref> Wessex Water became the core asset of a new company, [[Azurix]], which expanded to other water companies. After Azurix's promising [[Initial public offering|IPO]] in June 1999, Enron "sucked out over $1 billion in cash while loading it up with debt", according to [[Bethany McLean]] and Peter Elkind, authors of ''[[The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron]]''.<ref name=mclean>{{cite book|author-link1=Bethany McLean|last1=McLean|first1=Bethany|first2=Peter|last2=Elkind|title=The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron|publisher=Portfolio|year=2003|isbn=1-59184-008-2| url=https://archive.org/details/smartestguysin00mcle}}</ref>{{rp|250}} Additionally, British water regulators required Wessex to cut its rates by 12% starting in April 2000, and an upgrade was required of the utility's aging infrastructure, estimated at costing over a billion dollars.<ref name=mclean />{{rp|255}} By the end of 2000 Azurix had an operating profit of less than $100 million and was $2 billion in debt.<ref name=mclean />{{rp|257}} In August 2000, after Azurix stock took a plunge following its earnings report,<ref name=mclean />{{rp|257}} Mark resigned from Azurix and Enron.<ref>[[Kurt Eichenwald|Eichenwald, Kurt]]. [https://archive.org/details/conspiracyoffool00eich/page/362 ''Conspiracy of Fools: A True Story'']. Random House, 2005. pp. 362–364.</ref><ref>Smith, Rebecca and Aaron Lucchetti. [http://expressindia.indianexpress.com/fe/daily/20000829/fco29065.html "Rebecca Mark's Exit Leaves Enron's Azurix Treading Deep Water"] {{Webarchive|url=https://web.archive.org/web/20140222195613/http://expressindia.indianexpress.com/fe/daily/20000829/fco29065.html|date=February 22, 2014}}. Originally in: ''[[The Wall Street Journal]]''. August 28, 2000.</ref> Azurix assets, including Wessex, were eventually sold by Enron.<ref>Grigg, Neil S. [https://books.google.com/books?id=C_KenysXGuEC&pg=PA76 ''Water Finance: Public Responsibilities and Private Opportunities'']. John Wiley & Sons, 2011. p. 76.</ref>

===Misleading financial accounts===
{{Main|Enron scandal}}

In 1990, Enron's chief operating officer Jeffrey Skilling hired Andrew Fastow, who was well acquainted with the burgeoning deregulated energy market that Skilling wanted to exploit.<ref>{{cite book|last1=McLean|first1=Bethany|author-link1=Bethany McLean|last2=Elkind|first2=Peter|title=The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron|publisher=Portfolio|date=2003|location=New York, New York|pages=134|language=EN|isbn=1-59184-008-2}}</ref> In 1993, Fastow began establishing numerous [[limited liability]] [[special-purpose entity|special-purpose entities]], a common business practice in the energy industry. However, it also allowed Enron to transfer some of its liabilities off its books, allowing it to maintain a robust and generally increasing stock price and thus keep its critical investment-grade credit ratings.{{citation needed|date=November 2015}}

Enron was originally involved in transmitting and distributing electricity and natural gas throughout the US. The company developed, built, and operated power plants and pipelines while dealing with rules of law and other infrastructures worldwide.{{citation needed|date=November 2015}} Enron owned a large network of natural gas pipelines, which stretched coast to coast and border to border including Northern Natural Gas, [[Florida Gas Transmission]], [[Transwestern Pipeline]] Company, and a partnership in [[Northern Border Pipeline]] from Canada.{{citation needed|date=November 2015}} The states of California, New Hampshire, and Rhode Island had already passed power deregulation laws by July 1996, the time of Enron's proposal to acquire Portland General Electric corporation.<ref>{{cite book|last=Fox|first=Loren|title=Enron: the rise and fall|page=113|publisher=John Wiley & Son|year=1003|isbn=0-471-47888-1}}</ref> During 1998, Enron began operations in the [[water sector]], creating the Azurix Corporation, which it part-floated on the [[New York Stock Exchange]] during June 1999. Azurix failed to become successful in the water utility market, and one of its major concessions, in [[Buenos Aires]], was a large-scale money-loser.<ref>{{Cite web |last=GOLDBERG |first=LAURA |date=2002-03-26 |title=Enron's Azurix to sell Wessex Water at loss |url=https://www.chron.com/business/enron/article/Enron-s-Azurix-to-sell-Wessex-Water-at-loss-2068402.php |access-date=2022-05-20 |website=Chron |language=en-US}}</ref>

Enron grew wealthy due largely to marketing, [[promotion (marketing)|promoting]] power, and having a high stock price.{{citation needed|date=July 2012}} Enron was named "America's Most Innovative Company" by ''[[Fortune (magazine)|Fortune]]'' for six consecutive years, from 1996 to 2001.<ref>Sharp, p. 13.</ref> It was on the ''Fortune''{{'}}s "100 Best Companies to Work for in America" list during 2000, and had offices that were stunning in their opulence. Enron was hailed by many, including labor and the workforce, as an overall great company, praised for its large long-term pensions, benefits for its workers, and extremely [[Vitality curve|effective management]] until the exposure of its corporate fraud. The first [[Financial analyst|analyst]] to question the company's success story was [[Daniel Scotto]], an energy market expert at [[BNP Paribas]], who issued a note in August 2001 entitled ''Enron: All stressed up and no place to go'' which encouraged investors to sell Enron stocks, although he only changed his recommendation on the stock from "buy" to "neutral".<ref>{{cite news|last=English|first=Simon|title=Whistle-blower sent off|newspaper=The Daily Telegraph|date=January 20, 2001}}</ref>

As was later discovered, many of Enron's recorded assets and profits were inflated, wholly fraudulent, or nonexistent. One example was in 1999 when Enron promised to repay [[Merrill Lynch]]'s investment with interest to show a profit on its books. Debts and losses were put into entities formed offshore that were not included in the company's [[financial statement]]s; other sophisticated and arcane financial transactions between Enron and related companies were used to eliminate unprofitable entities from the company's books.<ref>{{Cite web |title=#510: 09-17-03 THREE TOP FORMER MERRILL LYNCH EXECUTIVES CHARGED WITH CONSPIRACY, OBSTRUCTION OF JUSTICE, PERJURY IN ENRON INVESTIGATION |url=https://www.justice.gov/archive/opa/pr/2003/September/03_crm_510.htm |access-date=2022-05-20 |website=www.justice.gov}}</ref>

The company's most valuable asset and the largest source of honest income, the 1930s-era Northern Natural Gas company, was eventually purchased by a group of Omaha investors who relocated its headquarters to their city; it is now a unit of [[Warren Buffett]]'s [[Berkshire Hathaway Energy]]. NNG was established as collateral for a $2.5&nbsp;billion capital infusion by [[Dynegy|Dynegy Corporation]] when Dynegy was planning to buy Enron. When Dynegy examined Enron's financial records carefully, they repudiated the deal and dismissed their CEO, Chuck Watson. The new chairman and CEO, the late Daniel Dienstbier, had been president of NNG and an Enron executive at one time and was forced out by Ken Lay.{{citation needed|date=November 2015}}  Dienstbier was an acquaintance of Warren Buffett. NNG continues to be profitable now.{{Relevance inline|date=May 2016}}

===2002–2006===
* In 2003, Enron moved its subsidiaries of '''Transwestern Pipeline''', '''Citrus Corporation''', and '''Northern Plains Natural Gas Company''' into a separate corporation. The plan was to distribute the shares of the new pipeline company to creditors as part of the planned reorganization. Enron later announced the name of the new pipeline corporation as CrossCountry Energy (CCE).<ref>{{Cite web |last=Directors |first=Clarion Energy Content |date=2003-06-27 |title=Enron announces organization of CrossCountry Energy Corp. |url=https://www.power-eng.com/gas/enron-announces-organization-of-crosscountry-energy-corp/ |access-date=2024-06-14 |website=Power Engineering |language=en-US}}</ref><ref>{{Cite web |date=2003-03-19 |title=Enron Board Approves Proposal to Create New Pipeline Company |url=https://www.blackstone.com/news/press/enron-board-approves-proposal-to-create-new-pipeline-company/ |access-date=2024-06-14 |website=Blackstone |language=en-US}}</ref>
* As a result of an attempted [[Mergers and acquisitions|merger]] with [[Dynegy]] and a series of court cases between Enron and Dynegy, '''Northern Plains''' became a part of Dynegy as a settlement from Enron. MidAmerican Energy Holdings, a subsidiary of [[Berkshire Hathaway]], later purchased the pipeline company from Dynegy for $928 million.<ref>{{Cite news |last=Sorkin |first=Andrew Ross |date=2002-07-30 |title=Berkshire to Buy a Gas Pipeline From Dynegy |url=https://www.nytimes.com/2002/07/30/business/berkshire-to-buy-a-gas-pipeline-from-dynegy.html |access-date=2024-06-14 |work=The New York Times |language=en-US |issn=0362-4331}}</ref> 
* In 2004, CCE was in turn purchased by CCE Holdings Inc. (CCEH), a joint venture between [[Southern Union Company|Southern Union Co]]. and [[GE Commercial Finance]] Energy Financial Service. '''Citrus Corporation''', which owns 100% of [[Florida Gas Transmission|Florida Gas Transmission Corporation]], was 50% owned by CCE and a subsidiary of [[El Paso Natural Gas|El Paso Natural Gas Company]]. CCEH acquired 50% of Citrus Corporation as purchased CCE.<ref>{{Cite web |date=2004-11-22 |title=CCE Completes Purchase of Gas Pipelines Formerly Owned by Enron |url=http://naturalgasintel.com/news/cce-completes-purchase-of-gas-pipelines-formerly-owned-by-enron-3/ |access-date=2024-06-14 |website=naturalgasintel.com |language=en}}</ref>  CCEH was the successful bidder in the [[United States Bankruptcy Court for the Southern District of New York|U.S. Bankruptcy Court for the Southern District of New York]] auction of CCE.<ref>New Mexico Wants a Piece of Enron -- Transwestern Pipeline (naturalgasintel.com)</ref>
* In 2006, 50% of CCEH was purchased by [[Energy Transfer Partners]] (ETP). CCEH later redeemed ETP's 50% ownership into 100% ownership of '''Transwestern'''.<ref>Energy Transfer Partners, L.P. Completes First Step in the Acquisition of the Transwestern Pipeline | Energy Transfer</ref>