- Aug 24, 2001
- 31,796
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Capitalism: You have two cows. You sell one and buy a bull. Your
herd multiplies, and the economy grows.
Enron capitalism: You have two cows. You sell three to your
publicly listed company, using letters of credit opened by your
brother-in-law at the bank, then execute a debt/equity swap with
an associated general offer so that you get all four cows back,
with a tax exemption for five cows. The milk rights of the six
cows are transferred via an intermediary to a Cayman Island
company secretly owned by your chief financial officer, who sells
the rights to all seven cows back to your listed company. The
annual report says the company owns eight cows, with an option
on six more.
Now you should understand how a company with $62 billion in
assets declared bankruptcy.
herd multiplies, and the economy grows.
Enron capitalism: You have two cows. You sell three to your
publicly listed company, using letters of credit opened by your
brother-in-law at the bank, then execute a debt/equity swap with
an associated general offer so that you get all four cows back,
with a tax exemption for five cows. The milk rights of the six
cows are transferred via an intermediary to a Cayman Island
company secretly owned by your chief financial officer, who sells
the rights to all seven cows back to your listed company. The
annual report says the company owns eight cows, with an option
on six more.
Now you should understand how a company with $62 billion in
assets declared bankruptcy.
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