Rebirth of the Industrial Tycoon

The so-called information written by Li Weidong is still some hindsight analysis about Enron.

The summary after the fact is naturally much more accurate than the prediction beforehand, and it is also more reasonable and well-founded. So when Situ Jian saw the information provided by Li Weidong, he immediately believed 50% of it.

In addition, Li Weidong once accurately predicted Japan's economic bubble and the Asian financial crisis. He even predicted the entire incident accurately. This made Situ Jian's prediction of Li Weidong very trustworthy. Sixty to seventy percent.

As a top economist, being able to believe 60 to 70% is almost equivalent to trusting Li Weidong's judgment.

In 2001, the "911 Incident" occurred in the United States that shocked the world and directly changed the world structure.

What Americans didn't expect was that more than a month after the "911" incident, Enron's accounting fraud scandal broke out.

At that time, Enron was one of the top ten companies in the United States and the largest natural gas company in the world. Given Enron's size and status, this was undoubtedly the 911 incident in the economic world for the United States, and Enron's collapse also changed the world's energy landscape.

Moreover, after Enron's problems were exposed, it filed for bankruptcy in just twenty-five days, which is also very rare.

The larger the company, the stronger its ability to resist risks. Enron ranked among the top ten in the United States and among the top 20 in the Fortune Global 500, but it only lasted for a short twenty-five days!

Many Japanese companies that are not as big as Enron have also experienced various fraud scandals. Some of them falsified production data, and some, like Enron, falsified business data. But under normal circumstances, as long as they bow to apologize and say "Simi Marseille", it will be enough. It's okay, only a handful of them have actually gone bankrupt.

Some internationally renowned large companies have experienced serious debt crises, but they can survive by tightening their belts to increase revenue and cutting expenditures, or gritting their teeth and selling off some of their assets. They will never go bankrupt like Enron.

When some top large companies encounter a crisis, the government will step in to help restructure their assets or provide funds to partially nationalize them to save the company.

There are precedents for these, including in the United States. For example, the U.S. government's sales to rescue General Motors, rescue Citibank, and rescue Freddie Mac and Fannie Mae all included some nationalization methods.

However, Enron did not apologize to settle the matter, did not tighten its belt to increase revenue and reduce expenditure, and did not receive help from the government, so it went bankrupt. For such a large company, this is absolutely incredible.

Therefore, there have always been some conspiracy theories about Enron's bankruptcy, believing that someone deliberately allowed Enron to go bankrupt.

The reason why Enron went bankrupt at such a large scale was not just for one reason, but because many bad factors came together, which ultimately led to Enron's bankruptcy.

Rome was not built in a day, and these bad factors were not built in a day or two. Instead, after decades of fermentation, small ailments accumulated and eventually turned into serious illnesses that were ultimately incurable.

There were two oil crises in the 1970s. One was the Fourth Middle East War in 1973. Although the United States did not directly participate this time and sold a wave of weapons, the oil crisis that broke out caused the industrial production of the United States to drop by 14%.

The second time was the political coup in Iran in 1978. This time the United States was a direct participant, which caused greater harm to American industrial production.

Therefore, throughout the 1970s, the United States implemented energy price controls with the purpose of ensuring stable industrial operations.

In the 1980s, the United States deregulated energy prices, and then energy prices in the United States began to be adjusted according to the market, which prompted energy companies to compete with each other.

Immediately afterwards, this competition led to mergers and reorganizations among enterprises. It was also during this period that Enron transformed from a company that laid natural gas pipelines to a real energy company.

However, for Americans, it is easier to make money by doing business than by playing finance.

Producing natural gas, how can you make money by doing natural gas hedging transactions?

So "Enron Capital" was established, and soon replaced "Enron Natural Gas" and became Enron's most important industry. This was also Enron's first step on the road to bankruptcy.

In order to be able to thrive in the financial market, more of Shiner's investors, Enron's CEO Kenneth, spent a lot of effort to persuade the U.S. Securities Commission to agree to Enron's implementation of "mark-to-market pricing."

Natural gas is not easy to store for a long time, so natural gas is basically extracted and sold now, and everyone uses fresh natural gas.

When you go to a restaurant to eat, there may be 82-year-old Lafite, 82-year-old ham, and 82-year-old cooks, but they will never use 82-year-old natural gas for cooking, because natural gas cannot be stored for that long.

The harder a commodity is to store, the more unstable its price will be. Products that cannot be stored mean one price per day. Therefore, natural gas, as a commodity, can only be priced in real time and cannot be priced on a market basis.

The same is true for natural gas contracts signed internationally. When the contract is signed, the price is only an estimate, but when the contract is completed, the price must be calculated in real time. At most, it is to set upper and lower limits for a transaction amount.

There is a futures market for commodities, such as oil trading. The contract price is 100 US dollars per barrel, but later the international market price dropped to 30 US dollars per barrel, but I still bought it according to the contract price of 100 US dollars per barrel. This is absolutely not true. possible.

Let’s not talk about the loss aspect. If you dare to trade like this, the futures market will be in chaos first. OPEC dares to chop you with a knife!

Unless there are some special circumstances, such as international sanctions, financial sanctions, etc. that hinder the seller's transaction, or some local currency exchange agreements are implemented, such transactions that are outside the normal international system can buy bulk items at relatively low prices. , otherwise in normal international transactions, it would be difficult to buy products that are very different from real-time pricing.

Enron's use of mark-to-market pricing for natural gas clearly violated the educational principles of natural gas.

This means that Enron can record the profits of transactions completed in the next few years according to its estimated transaction volume in one day.

In other words, Enron could settle the unfinished transactions in the contract when natural gas prices were relatively high, and more profits would appear on the books, but in fact it did not make so much money. .

This is just like if you make one thousand a day, it doesn't mean you make thirty thousand a month, nor does it mean you make three hundred and sixty thousand a year. But if you just use the day when you make the most money to calculate your annual income, the data will definitely be unreal.

Enron used this method to falsely report profits, causing investors to pour in. Enron also took a more tenacious step on the road to bankruptcy.

Letting a natural gas company mark its prices to market is a crazy policy in itself.

There are many first-class economists in the U.S. Securities and Exchange Commission, and there is no shortage of economic advisers around U.S. congressmen. It is impossible for them not to see the impact of this policy.

However, no one from Congress to the Securities Commission stopped this crazy move, which shows how powerful political funding and corporate lobbying are in the United States.

Even after they began to falsely report profits, Enron was still not satisfied. They still felt that making money was too slow!

As an Enron company, how many natural gas contracts can I sign and how much profit can I falsely report?

If we could control the natural gas trading in the United States, wouldn't our profits be doubled dozens of times!

So Enron started to act as a natural gas middleman, but this middleman made more than just the price difference.

As a natural gas middleman, Enron also used its own "mark-to-market" method in natural gas transactions. This was tantamount to borrowing money to lay eggs, and the falsely reported profits increased exponentially.

Seeing Enron's strong profitability, investors also flocked to it. Chase, Goldman Sachs, Citigroup, Deutsche Bank, etc., almost all investment banks, held Enron's stocks and bonds on a large scale.

Many Americans regard Enron as a capital-guaranteed financial product and invest all their wages and retirement funds in Enron stocks.

However, Enron is a listed company after all, and its financial reports must be made public on a regular basis. False profits can be easily detected in the accounts.

So Enron used another trick, they used special purpose entities (spe).

A special purpose entity is a legal entity established for a special purpose. It is a financial services business that emerged in the United States in the 1970s and 1980s. Its purpose is mainly to isolate financial risks in financing.

To put it simply, it means to set up a separate company, divest one of its assets, and then use the company's assets as collateral to issue bonds, thus providing butterfly financing. This is similar to the principle of corporate spin-off and listing.

This method greatly lowers the threshold for corporate financing and can better control risks. Therefore, in the financial field, special purpose entities are called the greatest financial innovation of the 20th century.

When companies use special purpose entities, they divest assets to facilitate financing.

Enron, on the other hand, did the opposite. They divested their debt so that the special purpose entity could be independent of the original company's financial reports. Therefore, Enron's financial reports are always very beautiful, and investors have always been full of confidence in Enron.

The help of accounting firm Arthur Andersen was also indispensable.

As one of the top five accounting firms in the United States, Andersen has been serving Enron. Without Andersen's help, Enron would not have been able to achieve such outstanding "profits."

The above are all related to Enron's financial fraud. In addition, investment power, blind expansion, management corruption, etc. are also the reasons for Enron's collapse.

In the final analysis, there are still two words, that is "greed"!

Two days later, Situ Jian took Li Weidong to the National Planning Commission, the predecessor of the National Development and Reform Commission.

"The Director Wang we are going to meet later is the leader of the Leading Group of the Engineering Construction Committee." Situ Jian introduced.

Li Weidong nodded. He had also heard of Director Wang's name.

Director Wang is a master of mechanical engineering, a senior engineer, and a typical technical official. In the future, he will serve as deputy director of the National Development and Reform Commission and be in charge of energy matters.

Reporting work for technical officials like this is actually a relatively pleasant thing, because others can understand what you say, and it is easier to communicate.

Director Wang didn't have much time to read the information in detail, so Li Weidong started explaining from the side.

After listening to Li Weidong's introduction, Director Wang asked: "Chairman Li, according to you, will Enron's stocks and bonds be subject to thunder?"

"It's not just a thunderstorm, the entire Enron company may go bankrupt!" Li Weidong replied.

Director Wang took a deep breath, and his expression suddenly became solemn. If others said this, Director Wang might sneer, but when Li Weidong said this, it was completely different.

Director Wang knows that Li Weidong once predicted the Asian financial crisis and the Japanese economic bubble, so he still believes in Li Weidong's predictions.

If Enron Company really goes bankrupt, then Huafu Gas will no longer be able to receive technical support from Enron Company. At that time, the part of the project that Huafu Gas is responsible for will also be suspended, and the construction of the entire West-East Gas Transmission Project will be suspended. will be affected.

After pondering for a moment, Director Wang said: "Chairman Li, your analysis is indeed reasonable, but after all, it is just an analysis. What I need is some more solid evidence."

For such a large project at the national strategic level, it is obvious that decisions cannot be made based on a seemingly well-founded analysis.

Li Weidong replied: "Over in the United States, I have asked financial reporters to conduct an investigation. It is estimated that the results will be available in half a month. Before that, I hope to delay the signing of the contract with Huafu Gas as much as possible to avoid major consequences. Loss."

"It seems that Chairman Li has quite a lot of connections on the shores of the United States, and he is actually able to investigate a large company like Enron." Director Wang said with a smile.

Li Weidong knew that Director Wang was trying to test him, and he had to explain clearly.

So Li Weidong said: "A large company like Enron has many eyes staring at it, and there are countless reporters who want to dig up dirt on Enron and become famous.

Moreover, Enron had many competitors, and they all wanted Enron to collapse. They would also send people to secretly investigate Enron's situation.

So I don't need to hire anyone. I just need to disclose the direction of the investigation to the financial reporters and give them some sponsorship money so that they can verify the data. "

"That's it!" Director Wang nodded: "I'm afraid it will be difficult in just half a month. I still have to ensure the progress of the project, so I can buy you a week at most."

"That's okay!" Li Weidong paused and then said; "Anyway, some measurement and calculation work is still needed before the official start of construction. As long as the construction has not started, everything will be in time."

Huafu Gas, general manager Lin Mancang is sitting in the office, waiting for news.

Finally, the phone rang, and Lin Mancang answered the call: "Have you found it? In the engineering construction leadership office, why did you delay signing the contract for a week?"

"The reason given by the Engineering and Construction Office is that there are still some procedures to go through, but this is only a nominal reason. In fact, someone came to lobby." He answered on the phone.

"Who is it?" Lin Mancang asked.

"Li Weidong, chairman of Puppy Electric." The other party replied.

"Li Weidong? What does this matter have to do with him? Puppy Electric Appliances is not in the natural gas business. Also, how can he, a private owner, have such a great reputation that even the engineering construction office will listen to him?" Lin Mancang was puzzled. asked.

"It is said that it is because Li Weidong has successfully predicted the Japanese economic bubble and the Asian financial crisis before, and has personally reported this work to the leaders. Therefore, the Engineering Construction Office will seriously consider Li Weidong's suggestions." The other party said. replied.

"But I haven't offended this Li Weidong! Why does he want to cause trouble for us?" Lin Mancang said puzzled.

"I think it's because of Huanghai Petrochemical. Huanghai Petrochemical has been supplying raw materials to Puppy Electric. The cooperation between them must have been almost ten years! This time Huanghai Petrochemical failed to win this project. Li Weidong should have helped Huanghai Petrified," the other party replied.

"Hmph! They Huanghai Petrochemical couldn't get this project because their technology is backward! They're not as good as others and they didn't improve quickly. Instead, they resorted to dirty tricks behind the scenes. It's so mean!"

Lin Mancang snorted coldly, and then asked: "Do you know what slanders Li Weidong and the Engineering Construction Office have made?"

"Li Weidong said that there is a problem with Enron's financial report. They are likely to have a thunderstorm or even go bankrupt. At that time, they will no longer be able to provide us with technical support, and the projects we are responsible for will not be able to continue." He answered on the phone. .

"Enron will go bankrupt? Hahaha, are you kidding? They are Fortune 500 companies and the world's largest natural gas company! How could it possibly go bankrupt! The Engineering and Construction Office would actually believe such deceptive lies!" Lin Mancang was furious. He said with a hum.

"The main reason is that Li Weidong's previous predictions were too accurate." He replied on the phone.

"Then you can't make decisions based on predictions! If predictions work, then just find a fortune teller to build a natural gas pipeline! You really don't ask the people or ghosts and gods!" Lin Mancang said angrily.

"Mr. Lin, what should we do? Do we have to wait a week?" he asked on the phone.

"This time I have an excuse to delay for a week, next time I will have an excuse to delay for two weeks, and maybe it will be delayed for a month in the future!" Lin Mancang took a deep breath and continued; "I will report to the group now, so that The group helps us put pressure!”

Huanghai Petrochemical, Song Jinlong is holding a decision-making meeting again.

"Director Song, this Li Weidong is really unreliable. He even said he could help us get the project back. What happened? Today is the day when Huafu Gas signs the contract!"

"Yeah, he boasted so much back then, and even wanted to bankrupt Enron, as if he could do anything! But now he has accomplished nothing!"

"Mr. Song, we shouldn't have trusted Li Weidong so easily. Nine out of ten of these private enterprises are scammers!"

"That Li Weidong still wants our New Oriental Motor, but now he probably doesn't even have the face to contact us! If I were Li Weidong, I would want to find a hole in the ground to crawl into."

Song Jinlong's face was also very embarrassed. After all, he was the first person to believe in Li Weidong. Although his subordinates are now saying bad things about Li Weidong, they are also mocking Song Jinlong in disguise. Song Jinlong also feels very embarrassed.

At this moment, the secretary came in, leaned close to Song Jinlong's ear, and said, "Mr. Song, Li Weidong from Puppy Electric called."

"Li Weidong still has the nerve to call?" Song Jinlong looked unhappy, and then said, "If you don't answer it, just say I'm in a meeting and I'm very busy now."

"I guess he wants to apologize! Mr. Song, I think you should give him a chance to apologize!" The oldest Lao Du next to him said, showing a gloating expression.

Lao Du is taking advantage of his seniority and clearly wants to see a joke.

This is a joke for both Li Weidong and Song Jinlong!

Song Jinlong was a little embarrassed, so he said, "Please answer the phone to the conference room and turn on the hands-free mode. I want to see what Li Weidong has to say!"

Soon, the phone was answered, and the hands-free mode was turned on, so that everyone in the conference room could hear it.

Li Weidong's voice came from the phone: "Chairman Song, have you read the latest issue of Fortune magazine?"

"What Fortune magazine?" Song Jinlong asked subconsciously.

"It's the Fortune magazine in the United States. It is the most famous financial magazine in the world. The Fortune 500 is made by this magazine." Li Weidong explained.

"No." Song Jinlong continued coldly: "We are not the Fortune 500, why should we read that thing!"

"But Enron is the Fortune 500!" Li Weidong laughed and continued; "Chairman Song, you should quickly find a copy of the latest Fortune magazine and take a look. There is an article about Enron. After reading it, you will know that I have been working these days!"

The parent company of Huafu Gas is Huafu Group, which is one of the top state-owned holding companies in China.

Lin Mancang asked Huafu Group for help, and Huafu Group decisively helped. The Engineering Construction Office could only sign the contract with Huafu Gas.

At the signing ceremony, the contract was already in front of them, and only the signature was left.

Lin Mancang took the pen from his subordinate with a smug look on his face, signed his name on the contract, and then stamped it with the official seal.

Then, he handed the contract to Director Wang, who signed and stamped it.

Just as Director Wang picked up the pen, a secretary from the Engineering Construction Office hurried in.

However, another staff member stopped the secretary: "Director Wang is signing the contract, let's talk about it later!"

"No, this matter must be reported to Director Wang immediately!" The secretary pointed to the Fortune magazine in his hand and said, "Something happened to Enron in the United States!"

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