Monday, January 27, 2020

Supreme court of the uk

Supreme court of the uk Introduction UK has created a new Supreme Court and had transformed the judiciary authority from the House of Lords by creating a new Supreme Court in the UK; it happened first time in the history of UK this procedure was distinctive and democratic in the society. ‘‘The focal area of creating new court was that they wants the judiciary to act as independent body because before that the judges of the higher court worked both as a legislature as well as judges in the house of lords, the main reason for creating a new court was that how fair it is for the judges to work as a judges in house of lords and as a officials in the parliament because the â€Å"state invest the judiciary in both parliament and in the house of lords and it put the independency and impartially of the court at higher risk. The other prospect at that period was invented that the decision made by the law lords judges might be challenged by the court of human rights on the basis of ‘fairness that they might be not be fair enough. In June 2003 the press conference was called and the Labour party announced the plan to generate a new Final Court in the United Kingdom. The debate was quite contentious, it was shocking news mainly for the parliament and for the public because it was new judiciary establishment for everyone and the issue arose that the House of Lords existed for the last hundreds of decays and for them creating a new supreme court was dishonouring and demolishing the history. ‘‘The debate of having a new Supreme Court whose members would not be a part of house of lord considered the issue of unjust between three national legal systems. The judges in the UK has not got that strong power like the judges in the United States they got strong supremacy to refuse or declare or say no to the ‘statute if its making trouble or inconveniences in their work but in the United kingdom they havent got this power i.e. if the parliament is passing the statute and if the judge say I dont think this statute should pass because it will create a problem or may be inconvenient for us in the future. The parliament will ignore the judiciary view and will do whatever they think is better because Parliament got the highest power. Judge has a very small room to fit in they will still apply the legislation if they think its not fair So, in simple words the law lords of the highest courts has no right and power to act in accordance to their convenience. Here the subject is what made Mr Blair to separate the judiciary from the parliament. The reason Mr Blair come to this unexpected constitutional reform is the conflict of Article 6 of Human Rights Act 1998 (‘The national court cannot ignore the 1998 Act if theres a conflict between) in Article6 its stated that Every one has a ‘‘Right to a Fair Trial everyone is entitled to an independency and impartiality. So the question is how fair it is for the judiciary to work as a legislative in the parliament and as well as to perform their duty in the House of Lords as a law lords. â€Å"In 2003 the council of Europe has questioned from the British government it was a real shameful for the British government they have questioned about the position of the Lord Chancellor, Lord Irvine of Lairg, he was the senior judge and was also a cabinet minister and a speaker of upper house of legislative. Its the point of the justice and fairness its unfair for one person holds many pow ers together. We had Lord Chancellors from the 20 centuries, sudden change was quite scandalous. Now the Lord Chief Justice is replaced by the Lord Chancellor, he will be responsible to look after the work and the performances of the courts. Although the issue is not about the judges undermining expertise, performances of the work they do but its about the righteousness. ‘‘Impartiality and independency must be measured against both subjectively and objectively standards. As it is been observed in ‘‘Findlay V United Kingdom [1997]24 EHHR 221 , Where a solider has challenged the court martial procedure on the basis that the senior officer arranged a meeting, he appointed his members and the junior officer who was under his order. Had power to break up an official agreement regarding the court martial. Hereafter, again in the case of ‘‘Morris V United Kingdom (application on 38784/97) [2002] ECHR 38784/97. In this case the applicant complained to the European court of human rights on the basis that in the court martial in his case, it was a violation of his right to a fair trial in Article 6 of European Convention of Human Rights. In simple words there was no independency in the court martial, the two officers for specific purpose chosen were also in compatible with the court martial independency. The decision of the reviewing authority to change the decision of the court martial was also in compatible with independence. The third intention is the new role of the Privy Council and transferring to the Supreme Court. ‘‘Moreover they will take all the devolution cases from the Scotland, N. Ireland and Wales. Finally the New Supreme Court is officially opened on the 9th October 2009 and there will be 11 permanent law lords and the cost of the building was aprox57 million. Conclusion: − Its only a debating question, its also difficult for Great Britain to abolish its conventions. This proposed Supreme Court may disturb the whole convention and political history but on the other hand the separation of the House of Lords will give the judiciary full independency to take the decision without any outside pressure but practically it wont happened. The new Supreme Court is not as powerful as the U.S is, because British is a unitary form of Govt. It will be so difficult for Supreme Court to get high degree of place in the society. BIBLOGRAPHY http://www.justice.org.uk/images/pdfs/supreme.pdf (i) See http://medlibrary.org/medwiki/Supreme_Court_of_the_United_Kingdom (9/12/09) V.Bodganor, Building the New Supreme court: National and Comparative Perspectives,[2005]Law Quarterly Review, p1,Westlaw. Robert.W, Robert, W. ‘The New Supreme Court and the changes on the justice system, 2006, LIMUK 292 http://www.opsi.gov.uk/ACTS/acts1998/ukpga_19980042_en_3 (4/12/09) See The new Supreme Court and the changes in the justice system, 2006 by Robert Walker S.Roger;B Ruth, A Supreme Court for the United Kingdom Policy Paper Justice Nov 2002(The separation of powers)p.3 See Findlay v United Kingdom[1997] 24 EHRR 221 , Westlaw See Morris v United Kingdom (App no 38784/97)[2002]ECHR 38784/97, Westlaw. ee by Lord Bingham of Cornhill ; The Constitution Unit Spring Lecture 2002

Sunday, January 19, 2020

Enron: The Smartest Guys in the Room Essay

The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the de facto dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganization in American history at that time, Enron was attributed as the biggest audit failure. Enron was formed in 1985 by Kenneth Lay after merging Houston Natural Gas and InterNorth. Several years later, when Jeffrey Skilling was hired, he developed a staff of executives that, by the use of accounting loopholes, special purpose entities, and poor financial reporting, were able to hide billions of dollars in debt from failed deals and projects. Chief Financial Officer Andre Fastow and other executives not only misled Enron’s board of directors and audit committee on high-risk accounting practices, but also pressured Andersen to ignore the issues . Enron shareholders filed a $40 billion lawsuit after the company’s stock price, which achieved a high of US$90.75 per share in mid-2000, plummeted to less than $1 by the end of November 2001. The U.S. Securities and Exchange Commission (SEC) began an investigation, and rival Houston competitor Dynegy offered to purchase the company at a very low price. The deal failed, and on December 2, 2001, Enron filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code. Enron’s $63.4 billion in assets made it the largest corporate bankruptcy in U.S. history until WorldCom’s bankruptcy the next year. Many executives at Enron were indicted for a variety of charges and were later sentenced to prison. Enron’s auditor, Arthur Andersen, was found guilty in a United States District Court, but by the time the ruling was overturned at the U.S. Supreme Court, the company had lost the majority of its customers and had closed. Employees and shareholders received l imited returns in lawsuits, despite losing billions in pensions and stock prices. As a consequence of the scandal, new regulations and legislation were enacted to expand the accuracy of financial reporting for public companies. One piece of legislation, the Sarbanes-Oxley Act, increased penalties for destroying, altering, or fabricating records in federal investigations or for attempting to defraud shareholders. The act also increased the accountability of auditing firms to remain unbiased and independent of their clients. Rise of  Enron In 1985, Kenneth Lay merged the natural gas pipeline companies of Houston Natural Gas and InterNorth to form Enron. In the early 1990s, he helped to initiate the selling of electricity at market prices and, soon after, the United States Congress approved legislation deregulating the sale of natural gas. The resulting markets made it possible for traders such as Enron to sell energy at higher prices, thereby significantly increasing its revenue. After producers and local governments decried the resultant price volatility and asked for increased regulation, strong lobbying on the part of Enron and others allowed for the proliferation of crony capitalism. As Enron became the largest seller of natural gas in North America by 1992, its gas contracts trading earned earnings before interest and taxes of $122 million, the second largest contributor to the company’s net income. The November 1999 creation of the EnronOnline trading website allowed the company to better manage its contra cts trading business. In an attempt to achieve further growth, Enron pursued a diversification strategy. The company owned and operated a variety of assets including gas pipelines, electricity plants, pulp and paper plants, water plants, and broadband services across the globe. The corporation also gained additional revenue by trading contracts for the same array of products and services with which it was involved. Enron’s stock increased from the start of the 1990s until year-end 1998 by 311% percent, only modestly higher than the average rate of growth in the Standard & Poor 500 index. However, the stock increased by 56% in 1999 and a further 87% in 2000, compared to a 20% increase and a 10% decrease for the index during the same years. By December 31, 2000, Enron’s stock was priced at $83.13 and its market capitalization exceeded $60 billion, 70 times earnings and six times book value, an indication of the stock market’s high expectations about its future prospects. In addition, Enron was rated the most innovative large company in America in Fortune’s Most Admired Companies survey. Causes of downfall Enron’s complex financial statements were confusing to shareholders and analysts. In addition, its complex business model and unethical practices required that the company use accounting limitations to misrepresent  earnings and modify the balance sheet to indicate favorable performance. The combination of these issues later resulted in the bankruptcy of the company, and the majority of them were perpetuated by the indirect knowledge or direct actions of Lay,Jeffrey Skilling, Andrew Fastow, and other executives. Lay served as the chairman of the company in its last few years, and approved of the actions of Skilling and Fastow although he did not always inquire about the details. Skilling constantly focused on meeting Wall Street expectations, advocated the use of mark-to-market accounting (accounting based on market value, which was then inflated) and pressured Enron executives to find new ways to hide its debt. Fastow and other executives â€Å"†¦created off-balance-s heet vehicles, complex financing structures, and deals so bewildering that few people could understand them.† Revenue recognition Main article: Revenue recognition Enron and other energy suppliers earned profits by providing services such as wholesale trading and risk management in addition to building and maintaining electric power plants, natural gas pipelines, storage, and processing facilities. When accepting the risk of buying and selling products, merchants are allowed to report the selling price as revenues and the products’ costs as cost of goods sold. In contrast, an â€Å"agent† provides a service to the customer, but does not take the same risks as merchants for buying and selling. Service providers, when classified as agents, are able to report trading and brokerage fees as revenue, although not for the full value of the transaction. Although trading companies such as Goldman Sachs and Merrill Lynch used the conventional â€Å"agent model† for reporting revenue (where only the trading or brokerage fee would be reported as revenue), Enron instead elected to report the entire value of each of its trades as revenue . This â€Å"merchant model† was considered much more aggressive in the accounting interpretation than the agent model. Enron’s method of reporting inflated trading revenue was later adopted by other companies in the energy trading industry in an attempt to stay competitive with the company’s large increase in revenue. Other energy companies such as Duke Energy, Reliant Energy, and Dynegy joined Enron in the wealthiest 50 of the Fortune 500 mainly due to their adoption of the same trading revenue  accounting as Enron. Between 1996 and 2000, Enron’s revenues increased by more than 750%, rising from $13.3 billion in 1996 to $100.8 billion in 2000. This extensive expansion of 65% per year was unprecedented in any industry, including the energy industry which typically considered growth of 2–3% per year to be respectable. For just the first nine months of 2001, Enron reported $138.7 billion in revenues, which placed the company at the sixth position on the Fortune Global 500. Mark-to-market accounting Main article: Mark-to-market accounting In Enron’s natural gas business, the accounting had been fairly straightforward: in each time period, the company listed actual costs of supplying the gas and actual revenues received from selling it. However, when Skilling joined the company, he demanded that the trading business adopt mark-to-market accounting, citing that it would represent â€Å"†¦ true economic value.† Enron became the first non-financial company to use the method to account for its complex long-term contracts. The mark-to-market method requires estimations of future incomes when a long-term contract is signed. These estimations are based on the future net value of the cash flow, costs related to the contract were often hard to predict. Often, the viability of these contracts and their related costs were difficult to estimate. Due to the large discrepancies of attempting to match profits and cash, investors were typically given false or misleading reports. While using the method, income from p rojects could be recorded, although they might not have ever received the money, and in turn increasing financial earnings on the books. However, in future years, the profits could not be included, so new and additional income had to be included from more projects to develop additional growth to appease investors. As one Enron competitor stated, â€Å"If you accelerate your income, then you have to keep doing more and more deals to show the same or rising income.† Despite potential pitfalls, the U.S. Securities and Exchange Commission (SEC) approved the accounting method for Enron in its trading of natural gas futures contracts on January 30, 1992. However, Enron later expanded its use to other areas in the company to help it meet Wall Street projections. For one contract, in July 2000, Enron and Blockbuster Video signed a 20-year agreement to introduce on-demand entertainment to various U.S. cities by year-end. After several  pilot projects, Enron recognized estimated profits of more than $110 million from the deal, even though analysts questioned the technical viability and market demand of the service. Whe n the network failed to work, Blockbuster withdrew from the contract. Enron continued to recognize future profits, even though the deal resulted in a loss. Special purpose entities Main article: Special purpose entity Enron used special purpose entities—limited partnerships or companies created to fulfill a temporary or specific purpose—to fund or manage risks associated with specific assets. The company elected to disclose minimal details on its use of â€Å"special purpose entities†. These â€Å"shell firms† were created by a sponsor, but funded by independent equity investors and debt financing. For financial reporting purposes, a series of rules dictates whether a special purpose entity is a separate entity from the sponsor. In total, by 2001, Enron had used hundreds of special purpose entities to hide its debt. Enron used a number of special purpose entities, such as partnerships in its Thomas and Condor tax shelters, financial asset securitization investment trusts (FASITs) in the Apache deal, real estate mortgage investment conduits (REMICs) in the Steele deal, and REMICs and real estate investment trusts (REITs) in the Cochise deal. The special purpose entities were used for more than just circumventing accounting conventions. As a result of one violation, Enron’s balance sheet understated its liabilities and overstated its equity, and its earnings were overstated. Enron disclosed to its shareholders that it had hedged downside risk in its own illiquid investments using special purpose entities. However, the investors were oblivious to the fact that the special purpose entities were actually using the company’s own stock and financial guarantees to finance these hedges. This prevented Enron from being protected from the downside risk. Notable examples of special purpose entities that Enron employed were JEDI, Chewco, Whitewing, and LJM. Executive compensation Although Enron’s compensation and performance management system was designed to retain and reward its most valuable employees, the system contributed to a dysfunctional corporate culture that became obsessed with short-term  earnings to maximize bonuses. Employees constantly tried to start deals, often disregarding the quality of cash flow or profits, in order to get a better rating for their performance review. Additionally, accounting results were recorded as soon as possible to keep up with the company’s stock price. This practice helped ensure deal-makers and executives received large cash bonuses and stock options. The company’s main focus was its stock price. Management was compensated extensively using stock options, similar to other U.S. companies. This policy of stock option awards caused management to create expectations of intense growth in efforts to give the appearance of reported earnings to meet Wall Street’s expectations. The stock ticker was located all throughout the company buildings, including the lobbies, elevators, and computers. At budget meetings, Skilling would develop target earnings by asking â€Å"What earnings do you need to keep our stock price up?† and that number would be used, even if it was not feasible. At December 31, 2000, Enron had 96 million shares outstanding as stock option plans(approximately 13% of common shares outstanding). Enron’s proxy statement stated that, within three years, these awards were expected to be exercised. Using Enron’s January 2001 stock price of $83.13 and the directors’ beneficial ownership reported in the 2001 proxy, the value of director stock ownership was $659 million for Lay, and $174 million for Skilling. Skilling believed that if employees were constantly worried about cost, it would hinder original thinking. As a result, extravagant spending was rampant throughout the company, especially among the executives. Employees had large expense accounts and many executives were paid sometimes twice as much as competitors. In 1998, the top 200 highest-paid employees received $193 million from salaries, bonuses, and stock. Two years later, the figure jumped to $1.4 billion. Timeline of downfall â€Å"At the beginning of 2001, the Enron Corporation, the world’s dominant energy trader, appeared unstoppable. The company’s decade-long effort to persuade lawmakers to deregulate electricity markets had succeeded from California to New York. Its ties to the Bush administration assured that its views would be heard in Washington. Its sales, profits and stock were soaring.† A. Berenson and R. A. Oppel, Jr. The New York Times, Oct 28, 2001. In February 2001, Chief Accounting Officer Rick Causey told budget managers: â€Å"From an  accounting standpoint, this will be our easiest year ever. We’ve got 2001 in the bag.† On March 5, Bethany McLean’sFortune article Is Enron Overpriced? questioned how Enron could maintain its high stock value, which was trading at 55 times its earnings. She argued that analysts and investors did not know exactly how Enron was earning its income. McLean was first drawn to the company’s situation after an ana lyst suggested she view the company’s 10-K report, where she found â€Å"strange transactions†, â€Å"erratic cash flow†, and â€Å"huge debt.† She telephoned Skilling to discuss her findings prior to publishing the article, but he called her â€Å"unethical† for not properly researching the company. Fastow cited two Fortune reporters that Enron could not reveal earnings details as the company had more than 1,200 trading books for assorted commodities and did â€Å"†¦ not want anyone to know what’s on those books. We don’t want to tell anyone where we’re making money.† In a conference call on April 17, 2001, then-Chief Executive Officer (CEO) Skilling verbally attacked Wall Street analyst Richard Grubman, who questioned Enron’s unusual accounting practice during a recorded conference call. When Grubman complained that Enron was the only company that could not release a balance sheet along with its earnings statements, Skilling replied â€Å"Well, thank you very much, we appreciate that †¦ asshole.† This became an inside joke among many Enron employees, mocking Grubman for his perceived meddling rather than Skilling’s offensiveness, with slogans such as â€Å"Ask Why, Asshole†, a variation on Enron’s official slogan â€Å"Ask why†. However, Skilling’s comment was met with dismay and astonishment by press and public, as he had previously disdained criticism of Enron coolly or humorously. By the late 1990s Enron’s stock was trading for $80–90 per share, and few seemed to concern themselves with the opacity of the company’s financial disclosures. In mid-July 2001, Enron reported revenues of $50.1 billion, almost triple year-to-date, and beating analysts’ estimates by 3 cents a share. Despite this, Enron’s profit margin had stayed at a modest average of about 2.1%, and its share price had decreased by more than 30% since the same quarter of 2000. As time passed, a number of serious concerns confronted the company. Enron had recently faced several serious operational challenges, namely logistical difficulties in operating a new broadband communications trading unit, and the losses from constructing the Dabhol Power project, a large power plant in India. There  was also increasing criticism of the company for the role that its subsidiary Enron Energy Services had in the California electricity crisis of 2000-2001. â€Å"There are no accounting issues, no trading issues, no reserve issues, no previously unknown problem issues. I think I can honestly say that the company is probably in the strongest and best shape that it has probably ever been in.† (Kenneth Lay answering an analyst’s question on August 14, 2001.) On August 14, Skilling announced he was resigning his position as CEO after only six months. Skilling had long served as president and COO before being promoted to CEO. Skilling cited personal reasons for leaving the company. Observers noted that in the months before his exit, Skilling had sold at minimum 450,000 shares of Enron at a value of around $33 million (though he still owned over a million shares at the date of his departure). Nevertheless, Lay, who was serving as chairman at Enron, assured surprised m arket watchers that there would be â€Å"no change in the performance or outlook of the company going forward† from Skilling’s departure. Lay announced he himself would re-assume the position of chief executive officer. Investors’ confidence declines Something is rotten with the state of Enron. —The New York Times, Sept 9, 2001. By the end of August 2001, his company’s stock value still falling, Lay named Greg Whalley, president and COO of Enron Wholesale Services and Mark Frevert, to positions in the chairman’s office. Some observers suggested that Enron’s investors were in significant need of reassurance, not only because the company’s business was difficult to understand (even â€Å"indecipherable†) but also because it was difficult to properly describe the company in financial statements. One analyst stated â€Å"it’s really hard for analysts to determine where [Enron] are making money in a given quarter and where they are losing money.† Lay accepted that Enron’s business was very complex, but asserted that analysts would â€Å"never get all the information they want† to satisfy their curiosity. He also explained that the complexity of the business was due largely to tax strategies and position-hedging. Lay’s efforts seemed to meet wit h limited success; by September 9, one prominent hedge fund manager noted that â€Å"[Enron] stock is trading under a cloud.† The sudden departure of Skilling combined with  the opacity of Enron’s accounting books made proper assessment difficult for Wall Street. In addition, the company admitted to repeatedly using â€Å"related-party transactions,† which some feared could be too-easily used to transfer losses that might otherwise appear on Enron’s own balance sheet. A particularly troubling aspect of this technique was that several of the â€Å"related-party† entities had been or were being controlled by CFO Fastow. After the September 11, 2001 attacks, media attention shifted away from the company and its troubles; a little less than a month later Enron announced its intention to begin the process of selling its lower-margin assets in favor of its core businesses of gas and electricity trading. This policy included selling Portland General Electric to another Oregon utility, Northwest Natural Gas, for about $1.9 billion in cash and stock, and possibly selling its 65% stake i n the Dabhol project in India. Restructuring losses and SEC investigation On October 16, 2001, Enron announced that restatements to its financial statements for years 1997 to 2000 were necessary to correct accounting violations. The restatements for the period reduced earnings by $613 million (or 23% of reported profits during the period), increased liabilities at the end of 2000 by $628 million (6% of reported liabilities and 5.5% of reported equity), and reduced equity at the end of 2000 by $1.2 billion (10% of reported equity). Additionally, in January Jeff Skilling had asserted that the broadband unit alone was worth $35 billion, a claim also mistrusted. An analyst at Standard & Poor’s said â€Å"I don’t think anyone knows what the broadband operation is worth.† Enron’s management team claimed the losses were mostly due to investment losses, along with charges such as about $180 million in money spent restructuring the company’s troubled broadband trading unit. In a statement, Lay revealed, â€Å"After a thorough review of our businesses, we have decided to take these charges to clear away issues that have clouded the performance and earnings potential of our core energy businesses.† Some analysts were unnerved. David Fleischer at Goldman Sachs, an analyst termed previously ‘one of the company’s strongest supporters’ asserted that the Enron management â€Å"†¦ lost credibility and have to reprove themselves. They need to convince investors these earnings are real, that the company is for real and that growth will be realized.† Fastow disclosed  to Enron’s board of directors on October 22 that he earned $30 million from compensation arrangements when managing the LJM limited partnerships. That day, the share price of Enron decreased to $20.65, down $5.40 in one day, after the announcement by the SEC that it was investigating the various suspicious activities of Enron, characterizing them as â€Å"some of the most opaque transactions with insiders ever seen† Attempting to explain the billion-dollar charge and calm investors, Enron’s disclosures spoke of â€Å"share settled costless collar arrangements,† â€Å"derivative instruments which eliminated the contingent nature of existing restricted forward contracts,† and strategies that served â€Å"to hedge certain merchant investments and other assets.† Such puzzling phraseology left many analysts feeling ignorant about just how Enron managed its business. Regarding the SEC investigation, chairman and CEO Lay said, â€Å"We will cooperate fully with the S.E.C. and look forward to the opportunity to put any concern about these transactions to rest.† Two days later, on October 25, d espite his reassurances days earlier, Lay dismissed Fastow from his position, citing â€Å"In my continued discussions with the financial community, it became clear to me that restoring investor confidence would require us to replace Andy as CFO.† However, with Skilling and Fastow now both departed, some analysts feared that revealing the company’s practices would be made all the more difficult. Enron’s stock was now trading at $16.41, having lost half its value in a little more than a week. On October 27 the company began buying back all its commercial paper, valued at around $3.3 billion, in an effort to calm investor fears about Enron’s supply of cash. Enron financed the re-purchase by depleting its lines of credit at several banks. While the company’s debt rating was still considered investment-grade, its bonds were trading at levels slightly less, making future sales problematic. As the month came to a close, serious concerns were being raised by some observers regarding Enron’s possible manipulation of accepted accounting rules; however, analysis was claimed to be impossible based on the incomplete information provided by Enron. Industry analysts feared that Enron was the new Long-Term Capital Management, the hedge fund whose bankruptcy in 1998 threatened systemic failure of the international financial markets. Enron’s tremendous presence worried some about the consequences of the company’s possible bankruptcy. Enron executives accepted questions in written form only. Proposed buyout by Dynegy Sources claimed that Enron was planning to explain its business practices more fully within the coming days, as a confidence-building gesture. Enron’s stock was now trading at around $7, as investors worried that the company would not be able to find a buyer. After it received a wide spectrum of rejections, Enron management apparently found a buyer when the board of Dynegy, another energy trader based in Houston, voted late at night on November 7 to acquire Enron at a very low price of about $8 billion in stock. Chevron Texaco, which at the time owned about a quarter of Dynegy, agreed to provide Enron with $2.5 billion in cash, specifically $1 billion at first and the rest when the deal was completed. Dynegy would also be required to assume nearly $13 billion of debt, plus any other debt hitherto occluded by the Enron management’s secretive business practices, possibly as much as $10 billion in â€Å"hidden† debt. Dynegy and Enron confirmed their deal on November 8, 2001. Commentators remarked on the different corporate cultures between Dynegy and Enron, and on the â€Å"straight-talking† personality of the CEO of Dynegy, Charles Watson. Some wondered if Enron’s troubles had not simply been the result of innocent accounting errors. By November, Enron was asserting that the billion-plus â€Å"one-time charges† disclosed in October should in reality have been $200 million, with the rest of the amount simply corrections of dormant accounting mistakes. Many feared other â€Å"mistakes† and restatements might yet be revealed. Another major correction of Enron’s earnings was announced on November 9, with a reduction of $591 million of the stated revenue of years 1997–2000. The charges were said to come largely from two special purpose partnerships (JEDI and Chewco). The corrections resulted in the virtual elimination of profit for fiscal year 1997, with significant reductions for the other years. Despite this disclosure, Dynegy declared it still intended to purchase Enron. Both companies were said to be anxious to receive an official assessment of the proposed sale from Moody’s and S&P presumably to understand the effect the completion of any buyout transaction would have on Dynegy and Enron’s credit rating. In addition, concerns were raised regarding antitrust regulatory restrictions resulting in possible divestiture, along with what to some observers were the radically different corporate cultures of Enron and Dynegy. Both companies  promoted the deal aggressively, and some observers were hopeful; Watson was praised for attempting to create the largest company on the energy market. At the time, Watson said â€Å"We feel [Enron] is a very solid company with plenty of capacity to withstand whatever happens the next few months.† One analyst called the deal â€Å"a whopper [†¦] a very good deal financially, certainly should be a good deal strategically, and provides some immediate balance-sheet backstop for Enron.† Credit issues were becoming more critical, however. Around the time the buyout was made public, Moody’s and S&P both reduced Enron’s rating to just one notch above junk status. Were the company’s rating to fall below investment-grade, its ability to trade would be severely limited if there was a reduction or elimination of its credit lines with competitors. In a conference call, S&P affirmed that, were Enron not to be bought, S&P would reduce its ra ting to low BB or high B, ratings noted as being within junk status. Additionally, many traders had limited their involvement with Enron, or stopped doing business altogether, fearing more bad news. Watson again attempted to re-assure, attesting at a presentation to investors that there was â€Å"nothing wrong with Enron’s business†. He also acknowledged that remunerative steps (in the form of more stock options) would have to be taken to redress the animosity of many Enron employees for management after it was revealed that Lay and other officials had sold hundreds of millions of dollars’ worth of stock during the months prior to the crisis. The situation was not helped by the disclosure that Lay, his â€Å"reputation in tatters†, stood to receive a payment of $60 million as a change-of-control fee subsequent to the Dynegy acquisition, while many Enron employees had seen their retirement accounts, which were based largely on Enron stock, decimated as the price decreased 90% in a year. An official at a company owned by Enron stated â€Å"We had some married couples who both worked who lost as much as $800,000 or $900,000. It pretty much wiped out every employee’s savings plan.† Watson assured investors that the true nature of Enron’s business had been made apparent to him: †Å"We have comfort there is not another shoe to drop. If there is no shoe, this is a phenomenally good transaction.† Watson further asserted that Enron’s energy trading part alone was worth the price Dynegy was paying for the whole company. By mid-November, Enron announced it was planning to sell about $8 billion worth of underperforming assets, along with a general plan to reduce  its scale for the sake of financial stability. On November 19 Enron disclosed to the public further evidence of its critical state of affairs. Most pressingly that the company had debt repayment obligations in the range of $9 billion by the end of 2002. Such debts were â€Å"vastly in excess† of its available cash. Also, the success of measures to preserve its solvency were not guaranteed, specifically as regarded asset sales and debt refinancing. In a statement, Enron revealed â€Å"An adverse outcome with respect to any of these matters would likely have a material adverse impact on Enron’s ability to continue as a going concern.† Two days later, on November 21, Wall Street expressed serious doubts that Dynegy would proceed with its deal at all, or would seek to radically renegotiate. Furthermore Enron revealed in a 10-Q filing that almost all the money it had recently borrowed for purposes including buying its commercial paper, or about $5 billion, had been exhausted in just 50 days. Analysts were unnerved at the revelation, especially since Dynegy was reported to have also been unaware of Enron’s rate of cash use. In order to end the proposed buyout, Dynegy would need to legally demonstrate a â€Å"material change† in the circumstances of the transaction; as late as November 22, sources close to Dynegy were skeptical that the latest revelations constituted sufficient grounds. The SEC announced it had filed civil fraud complaints against Andersen. A few days later, sources claimed Enron and Dynegy were renegotiating the terms of their arrangement. Dynegy now demanded Enron agree to be bought for $4 billion rather than the previous $8 billion. Observers were reporting difficulties in ascertaining which of Enron’s operations, if any, were profi table. Reports described an en masse shift of business to Enron’s competitors for the sake of risk exposure reduction. Bankruptcy Enron’s stock price (former NYSE ticker symbol: ENE) from August 23, 2000 ($90) to January 11, 2002 ($0.12). As a result of the decrease of the stock price, shareholders lost nearly $11 billion. On November 28, 2001, Enron’s two worst-possible outcomes came true: Dynegy Inc. unilaterally disengaged from the proposed acquisition of the company, and Enron’s credit rating was reduced to junk status. Watson later said â€Å"At the end, you couldn’t give it [Enron] to me.† The company had very little cash with which to operate, let alone satisfy enormous debts. Its stock price fell to $0.61 at the end of  the day’s trading. One editorial observer wrote that â€Å"Enron is now shorthand for the perfect financial storm.† Systemic consequences were felt, as Enron’s creditors and other energy trading companies suffered the loss of several percentage points. Some analysts felt Enron’s failure indicated the risks of the postâ€⠀œSeptember 11 economy, and encouraged traders to lock in profits where they could. The question now became how to determine the total exposure of the markets and other traders to Enron’s failure. Early calculations estimated $18.7 billion. One adviser stated, â€Å"We don’t really know who is out there exposed to Enron’s credit. I’m telling my clients to prepare for the worst.† Enron was estimated to have about $23 billion in liabilities from both debt outstanding and guaranteed loans. Citigroup and JP Morgan Chase in particular appeared to have significant amounts to lose with Enron’s bankruptcy. Additionally, many of Enron’s major assets were pledged to lenders in order to secure loans, causing doubt about what if anything unsecured creditors and eventually stockholders might receive in bankruptcy proceedings. Enron’s European operations filed for bankruptcy on November 30, 2001, and it sought Chapter 11 protection two days later on December 2. It was the largest bankruptcy in U.S. history (before being surpassed by WorldCom’s bankruptcy the next year), and resulted in 4,000 lost jobs. The day that Enron filed for bankruptcy, the employees were told to pack their belongings and were given 30 minutes to vacate the building. Nearly 62% of 15,000 employees’ savings plans relied on Enron stock that was purchased at $83 in early 2001 and was now practically worthless. In its accounting work for Enron, Andersen had been sloppy and weak. But that’s how Enron had always wanted it. In truth, even as they angrily pointed fingers, the two deserved each other. Bethany McLean and Peter Elkind in The Smartest Guys in the Room. On January 17, 2002 Enron dismissed Arthur Andersen as its auditor, citing its accounting advice and the destruction of documents. Andersen countered that it had already ended its relationship with the company when Enron became bankrupt.

Saturday, January 11, 2020

The Nile Paper

River of Africa Surrounding landforms and availability of resources affect civilizations. The survival of countries in Africa relies on the Nile River. Physical landforms, climatic agriculture as well as ancient cultures and advances contribute to the effective utilization of the Nile. Various subdivisions and landforms along the coast of the river present tremendous opportunities for the Africans. Over time, the control of water intake and the substantial contribution of different climates create a vast diversity among the vegetation because of the proliferous soil by the Nile’s annual flood.The formation of ancient cultures, agriculture, and technologies significantly contributed to the developing countries adjacent the banks of the Nile. The tributaries, landforms and various transportation opportunities assist the Africans. The tributaries connect several locations in Africa to provide the countries with water, exploration, and fertile land. The portion of the river in Nor th Africa consists of three main sources: the White Nile, the Blue Nile, and the Atbara Rivers. The White Nile contains the largest mass of water so that during the dry season the river remains sustainable (Middleton vol. ). Western explorers investigated Africa because of the Blue Nile. The Blue Nile â€Å"is the link between the Mediterranean and the Deep Interior;† therefore, â€Å"the search for its source drew many Western explorers into Africa† (Murray 170). Among many of the smaller tributaries, the Atbara provides water in Ethiopia during the dry season. The Atbara â€Å"runs through the Ethiopian highlands during the wet seasons, but is dry from January to June† (Barrow). Therefore, it provides the amount of water suitable for the environment during that half of the year.The waters and soils of the Nile, the largest river in the world, supplies life to the barren desert and the river’s neighboring area. The two lands surrounding the Nile affect t he flooding and climate zones. The black land â€Å"was the fertile land on the banks of the Nile† (Barrow). Black layer contains silt which contains layers of sediments left behind from the annual flood; moreover, the sediments made the land useable for agriculture. The red land â€Å"was a region of inhospitable desert† (Barrow). This region of desert protected the Egyptians from attack bordering the country.The headwaters of the flood water originate from the Ethiopian Highlands. Every summer, â€Å"rain in the Ethiopian highlands sent a barrage of water that overflowed the banks of the Nile† (Barrow). Without the precipitation in the Ethiopian Highlands, the river would cease to provide any nutritional soil; as a result, the prominent agricultural land would indefinitely vanish from existence, leaving a barren, tundra like land. The waters contain numerous beneficial obstacles environing the area. The small ridges of the central plateaus mean that â€Å"the lower courses of rivers are characterized by waterfalls and cataracts† (Murray 12).The cataracts and waterfalls redirect the course of the river, affecting the vegetation and farming around it. Settlement in Sudan depends on the river. The White Nile River flows â€Å"north across the Sudanese border into the Sudd, the world’s largest permanent swamp† (Middleton 3: 66). Even though half of the river’s water evaporates in the swamps, half of Sudan’s population lives among the banks of the subsidiary. The river’s surrounding features, as well as the tributaries and waterfalls, significantly contribute to the welfare of the country’s needs.Flooding and climate influence the vegetation in the area, which remains vital for existence. Irrigation manipulates the growth and development of agriculture; moreover, irrigation systems contribute to improve the effective utilization of the river. Because of the dry climate and vast desert surroundi ng the river, the irrigation remains for life. The continents â€Å"unreliable rainfall and frequent drought make irrigation an essential tool for agriculture† (Middleton 2: 159). Irrigation supplies the water for the crops during the dry season, which remains essential for food. Flood cropping exemplifies ancient forms of irrigation and technology.The Egyptians would plant crops, and would then flourish when the river floods in the fall, followed by harvesting the crops in the winter; moreover, the people named the system basin irrigation for the pattern of events. (Middleton 2: 159). Flood cropping did not create an abundance of crops due to the unusual pattern of the great flood. In the early stages of developing irrigation, Egyptians formed a system called basin irrigation. When the Nile floods, the water fills the basin; as a result, when the river fell the farmers allowed â€Å"the water to drain away and then plant crops in the wet soil left behind† (Middleton 2 : 159).Basin irrigation created a mass majority of the planted crops which created a bountiful amount of food for the people; however, the farmers could only plant crops once a year. The vegetation grown around the Nile River Basin depends merely on the flooding season and by the proliferous soil. The annual flood of the Nile contributes to the mass vegetation and of the cycle of growth. The close correlation between the distribution of soil and vegetation remains a significant factor for plant cover in soil formation. The flood produces soil needed for growth of various types of vegetation.When the annual flood recedes, the river leaves a â€Å"thick layer of silt which was excellent soil to plant seeds in the soil after it had been ploughed† (Barrow). The silt provides the necessity to properly grow plants. The cycle of the growing crops consist of Akhet, Peret, and Shamuc. During the months of June through September, also known as the Akhet, the annually flood occurs; also , during these months, farming has ceased (Barrow). From the months of October through February, or the period called the Peret, the floodwaters recede, leaving a thick layer of silt; moreover, during this time the farmers plough the soil (Barrow).During the time of Shamuc, months from March through May, the farmers harvest the crops and workers repair the canals (Barrow). The three periods of time work in perfect tandem to grow crops. The vegetation grown in the Nile Basin depends on the soil for nutrients. One of the most prominent crops grown for centuries yet to come remains wheat and other types of grain along the Nile River. The grain along the Nile supplies people to make â€Å"bread, porridge, and beer. After the grain was grown, they grew assorted fruits† (Barrow).The vegetation grown in the Nile supplies the people with nourishment and trade opportunity. The climate along the Nile affects the type of vegetation grown along the banks as well as the human livelihood. The Nile consists of four climates: the tropical wet, the tropical dry, steppe, and desert. The tropical wet and tropical dry lie in the South of Africa, and they receive much rainfall, with some dry seasons (Boehm). The desert and steppe climate lie near the Mediterranean Sea, along the start of the Nile.They receive less than ten to fourteen inches of rain a year; moreover, they have little vegetation, leaving the various locations barren with extreme temperatures (Boehm). The strip of land along the Nile makes it hospitable because of the giant mass of water. Farmers use animals mostly for work, labor, and production of food. They would use these animals for â€Å"trampling in the seeds, pulling the plough, eating unwanted grain and providing them with food† (Barrow). The animals play an important role for the livelihood of the people by providing food, labor, and help with farming.The vegetation growth depends on the annual flood, climate, and animals of the area. The bas e of civilizations, technological advances, and cultures primarily exist in Africa because of the Nile, which makes it essential for the countries environing the area prosperous. Transportation began early for the Egyptians because of trade and fishing, but eventually they developed technologies for transferring goods to other countries. The ancient Egyptians developed boats from papyrus to obtain fish and materials for other necessities (Boehm). As the technologies advanced, other ideas arose to get to certain points in the river.The people would use â€Å"steamers to transport only to a certain point in the river† (Barrow). The steamers would eventually head to the Mediterranean through various tributaries until the goods traveled all around the world. This process would only be possible through the Nile River, which provided transportation to associate themselves with other countries. The start of a great civilization, Egypt, would progress only with the significant contri bution of the Nile River. Many Egyptians inhabited close to the Nile because it provided transportation, water, and amazing soil for growing crops.Through farming, the Egyptians created new mechanisms to make farming easier for the farmers. (Murray). A main source of food for the Egyptians remains fish. The most wanted fish from Africa today, the Nile Perch, has been shipped all around the world (Middleton Vol. 4). Today, almost all of the Egypt’s residents live along the Nile Delta or the along the course of the river. The river supplied the African countries with technology and culture, as well as the prominent ancient civilization of Egypt. Culture and energy existed because of the Nile River’s presence.Religion has been spread from country to country by the existence of the Nile tributaries. The capital of Sudan, Khartoum, lies between the White and Blue Nile. The spread of the Muslim religion has a major influence on the country, and â€Å"it is the primary relig ion of the Nile† (Murray 173). The religion was established when Muhammad had begun preaching around the Nile Valley, spreading it to various parts of the continent. Along the banks of the Nile, the Egyptians harvested a plant named sorghum. Because of the sorghum, the Egyptians developed â€Å"crafts such as boating, matting, basketry, and pottery† (Murray 46).The Nile provided vegetation and materials to further develop technologies in agriculture and aquaculture. Africans developed new technologies to harvest power from the water, and the future of energy, hydroelectric power. Today, â€Å"electricity is provided by generators powered by the Aswan Dam† (Boehm 426). The Nile’s Aswan Dam, developed to control the annual flood and preserve water, provides electricity for the people surrounded by the Nile. The Nile provided the ancient Egyptians with necessities, and the river continues to contribute to Egypt and Sudan today.Without the existence of the Nil e, Egypt would remain barren and underdeveloped. The base of Egyptian civilization and technologies developed the countries encircling the coast. Moreover, the Nile provides the people with food, electricity and transportation, which remain a significant aspect of everyday life. Although new developments have altered the need for the Nile, people still rely on the Nile. ? Works Cited Barrow, Mandy. Ancient Egyptian Farming. Chiddingstone Church of England School, Jan. 2013. Web. 21 Jan. 2013. Barrow, Mandy. The River Nile. Chiddingstone Church of England School, Jan. 013. Web. 21 Jan. 2013. Boehm, Richard G. World Geography and Cultures. Columbus, OH: McGraw-Hill Companies, 2012. Print. Middleton, John. Ed. Africa; an Encyclopedia for Student. Volume 2. New York: Charles Scribner’s Sons, 2002. Print. Middleton, John. Ed. Africa; an Encyclopedia for Student. Volume 3. New York: Charles Scribner’s Sons, 2002. Print. Murray, Jocelyn. Ed. The Cultural Atlas of Africa. New York: Checkmark Books, 1998. Print. Nile, Battle of the: Nile River. Photograph. Encyclopedia Britannica. Web. http://www. school. eb. com. com/eb/art-228/ ?

Friday, January 3, 2020

Martin Luther s Life Changing Life - 1604 Words

Martin Luther Kjerstine Martin HIST 101-04F May 1, 2016 Thu-ba-lump. A single horse’s hooves hit against the dirt as he runs down the road. Thu-ba-lump. Thunder claps overhead. Thu-ba-lump. Lightning pierces the ground, startling the horse and throwing the rider from it. On his knees, frightened for his life, he calls out into the storm, â€Å"Help me, St. Anne! I will become a monk! (Christian History Magazine Staff, 2000)† While no one knows exactly what happened on this day, it was quite possibly one of the most life-changing days in Martin Luther’s life. For he escaped the storm unhurt, and as he had promised to God, he would join the monkhood (Harrison, 2002). Of course, his entry into the Church was just the beginning of a long journey that he was about to embark on in becoming one of the most influential men in history. Though living in sixteenth-century Germany, Martin Luther had one of the most significant influences upon the western world not only by arguing the Bible – not the Church – as the ultimate authority over people and that each believer a member of the priesthood, but also by challenging, and ultimately breaking, the crippling hold that the Church had on the people of his time. Martin Luther was born in 1483 Germany, a terribly dark time in their history. In Western Europe, the Spanish Inquisition was just getting started, and in Eastern Europe, the Plague was still traveling through towns and wiping out populations. When Luther was born, only oneShow MoreRelatedâ€Å"I Am Happy To Join With You Today In What Will Go Down1420 Words   |  6 Pages125) Being a hero means to be a leader. To be a leader you have to have strength, courage, and commitment. In the 1960s, there were many leaders fighting for what they believe is the right of freedom and equality of all people. A major leader, Martin Luther King Jr. was involved in the Civil Rights Movement during the 60s. King was influenced by advocates of nonviolence such as Mahatma Gandhi. He wanted to seek equal ity for African Americans that were underprivileged and victims of injustice throughRead MoreEssay on The Life of Martin Luther King Jr.1244 Words   |  5 Pagesdevoted his life to changing the world. Martin Luther King, Jr. was born to Alberta and Martin Luther King. Alberta Williams King was born September 13, 1904 in Atlanta, Georgia. Martin Luther King, Sr. was born December 19, 1899 in Stockbridge, Georgia. Martins dad was a pastor at the Ebenezer Baptist Church in Atlanta, Georgia. His mother was a school teacher. His siblings were Christine King Farris born September 11, 1927, and Alfred Daniel Williams King born July 30, 1930. Martin was theRead MoreThe Civil Rights Movement911 Words   |  4 PagesThe Civil Rights Movement: Martin Luther King Jr. Martin Luther King Jr. changed history not only for African American’s, but for all who live in the United States. Martin was born on January 15, 1929, in Atlanta, Georgia. As a child Martin attended many public segregated schools throughout Georgia until he graduated at the age of fifteen. Following high school, Martin Luther King Jr. attended many colleges such as, Morehouse College, Crozer Theological Seminary, and Boston University. While studyingRead MoreThe Death Of Martin Luther1013 Words   |  5 Pages Martin Luther was born in Germany on November 10th, 1483. He was the son of Hans and Margarette Luther. In 1501 Martin entered the University of Erurt where he received a master of arts degree. He got a degree in grammar, logic, rhetoric and metaphysics which seemed as if he was becoming a lawyer. In 1505, Luther went through some life changing experiences which led him on a new course. He got caught in a storm where he plead out to St. Anne, Save me, St. Anne, and I have become a monkRead MoreThe 95 Theses By Martin Luther982 Words   |  4 PagesFor this essay, I chose the 95 Theses by Martin Luther as my primary source. This primary source is a historical document that cause major uproars throughout Europe. The 95 Theses were written by Martin Luther in October of 1517. The 95 Theses were ninety-five statements written by Martin Luther in opposition to the Roman Catholic Church. They challenged the common practices of the Catholic Church, including indulgences and the authority of the pope. The 95 Theses sparked a theological debate thatRead MoreMartin Luther : Cuts All Ties With Catholic Church1712 Words   |  7 PagesDecember 2015 Martin Luther: Cuts All Ties with Catholic Church I. Introduction Whether you believe in a higher power or not, religion has impacted our lives in some way. Vice versa, people can make an impact on religions and transform them to what we know today. Take for example Martin Luther. He was a man looking to simply reform the Roman Catholic Church and its preaching’s because he disagreed with it. With his many ideas, strong will, and criticisms, he forever changed the world. Martin challengedRead MoreThe Legacy Of Martin Luther915 Words   |  4 Pages Martin Luther was a big deal in history. He had a big part in the reformation. Priests would take your money by telling you that you could get rid of your sin if you paid them. Martin knew that it was all a scam. He started going up against the priests, and telling the people that it was a scam. You could ask for forgiveness from God on your own for free. He fought for what he believed, and he made a good impact in history. Luther was a born in a peasant family. His father worked hard to keepRead MoreCivil Disobedience, And Martin Luther King Jr. s Letter From Birmingham Jail1018 Words   |  5 Pagessociety. Historic figures such as Rosa Parks, Mahatma Gandhi, and Martin Luther King Jr. all acted civilly disobedience, but society benefitted from their movements. Civil disobedience is the underlying theme of Sophocles’ Antigone and Martin Luther King Jr.’s Letter From Birmingham Jail. The main character of Sophocles’ Antigone, Antigone, acts civil disobedience, just as Dr. King acted civilly disobedient. Both Antigone and Martin Luther King Jr. fought to gain justice for the people who they believedRead MoreThe Appeal Of Indulgences By Johann Tetzel1407 Words   |  6 PagesQuestion 1: Indulgences: The offer of indulgences was a practice where the congregation recognised a gift or other beneficent work with a bit of paper, a liberality, that ensured that the supplier s spirit would enter paradise all the more rapidly by lessening their time in limbo. The Church taught that if a man had submitted no genuine sins that ensured a spot in damnation and they kicked the bucket before apologising and making up for the greater part of their wrongdoings, then their spirit wentRead MoreMartin Luther King Jr1194 Words   |  5 Pagesï » ¿ Simmons 1 Gabrielle Simmons Mrs. Fitzgerald Social Studies 8A 4/27/10 Martin Luther King Jr. Martin Luther King Jr. is a well known and an inspiring man to all cultures of the world. King was and still is one of the most influential heroes. King s views and believes helped African Americans through the 50 s and 60 s to the rights and liberties that was their right. King faced many obstacles on his journey, things like jail and even assassination attempts. Despite these obstacles,