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IN THE NEWS - December 8, 2001: Enron Fails
This is Steve Ember with the VOA Special English program, IN THE NEWS.
One of the largest companies in the United States has failed. The Enron Corporation has asked a federal court for protection because it can not pay the thousands of millions of dollars of money it owes. Enron is an energy trading company that buys and sells electricity and natural gas. It also owns or controls several other companies that deal in several different products.
Enron asked for bankruptcy protection for itself and fourteen of its companies. Under the bankruptcy law, a business can continue to operate while it tries to negotiate new credit with companies and banks to whom it owes money.
Enron began failing in October as some of its financial problems became known. The value of its stock quickly fell. The stock closed Thursday at thirty-six cents a share. Less than a year ago, each share of Enron stock sold for more than eighty dollars.
Enron will continue to try to do business with the aid of court protection. However Enron has already dismissed four-thousand of its more than twenty-one-thousand workers. Most of those dismissed were employees that worked at the company’s headquarters in the western city of Houston, Texas. Last week, Enron dismissed about one-thousand-one-hundred employees in Europe.
These actions caused anger among the workers because the company’s retirement plan had already lost more than one-thousand-million dollars. Many employees not only lost their jobs, but also lost the money they had invested in the company as part of their retirement plan.
Reports say the United States Justice Department has begun a criminal investigation into the company’s activities. The Labor Department says it is examining the company’s dealings with the employees’ retirement plan.
The Security and Exchange Commission already is investigating Enron’s finances. And Congressional committees have announced they will hold hearings to investigate the failure of Enron and the investment actions of the company’s senior officials.
The Enron Corporation has brought legal charges against the Dynegy Company. Enron says Dynegy had agreed to link with Enron. Enron says this would have saved it. Enron says the Dynegy Company refused to honor a legal business agreement. Enron is asking the court to force Dynegy to pay ten thousand million dollars in damages.
The Enron Corporation once was the world’s largest energy trader. Its failure is affecting energy markets in many countries including Germany, Britain and India. Reports say companies and banks that have lent money to Enron could lose at least five-thousand-million dollars. Experts say what caused Enron to fail will be the subject of legal questions and court actions for many months to come.
This VOA Special English program, IN THE NEWS, was written by Paul Thompson. This is Steve Ember.
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