Watchdogs That Failed to Bark: Standards of Tax Review After Enron

Abstract

You will come to a place where the streets are not marked. Some windows are lighted. But mostly they’re darked. A place you could sprain both your elbow and chin! Do you dare to stay out? Do you dare to go in? How much can you lose? How much can you win?

Enron Corporation, which was the seventh-largest U. S. corporation prior to its collapse, will long be a case study on various corporate governance and ethical failures. But the most frightening aspect of Enron is that it was never designed or intended to be a massive fraudulent scheme from its inception, unlike many substantial financial frauds.
It began by simply trading energy futures and eventually expanded to trading futures in commodities well beyond the company’s expertise. To continue its positive financial performance, the company required its advisors to develop “blowback” strategies ensuring continued stock price appreciation.