Reborn Industrial Tycoon

Chapter 631 Enron cannot fail

Just as Director Wang was about to sign, the secretary hurriedly came closer and whispered in Director Wang's ear: "Boss, something happened at Enron. An article was published in the latest issue of Fortune magazine in the United States, secretly

Alleging that Enron had falsely reported profits."

The secretary said and handed over the Fortune magazine.

Director Wang has a master's degree in engineering, so he can naturally understand English. Although Director Wang does not recognize some of the exclusive financial terms in the article, he can still understand the content of the entire article.

After reading this article, Director Wang frowned suddenly. At this time, he remembered Li Weidong's speculation.

"Enron really has a problem, and Li Weidong made it right! Could it be that Enron will really go bankrupt? In that case, it will really affect the construction of the entire West-East Gas Transmission Project."

Lin Mancang watched Director Wang put down the pen in his hand, took an English magazine and read it for a while, then his expression became stagnant, so he asked: "Director Wang? What's wrong?"

Director Wang pondered for a moment and then said, "Mr. Lin, please leave this contract with me for now! After I sign it, I will send someone to deliver it to you."

Lin Mancang suddenly showed an anxious expression, and he asked, "What happened?"

"There may be a problem with Enron in the United States. I need to contact the staff there to find out the details." Director Wang replied.

…

In "Fortune" magazine, an article titled "Is Enron's stock price overvalued?" appeared, and the author was none other than Bethany MacLean.

In terms of finance and economics, Fortune magazine is still very authoritative. It is not like The Economist, which has been calling for the collapse of China every three days for more than 30 years.

If you work on Wall Street, Fortune is definitely a must-read magazine.

Thanks to the $20,000 sponsored by Li Weidong, Bethany McLean found a professional accountant to review Enron's financial reports in recent years, and then used a large amount of data in the article to question Enron's profitability.

Of course, all Bethany McLean can do is question. Although it is obvious that there is a problem with Enron's profitability, Enron's false accounting is very rigorous, and there is no problem at all from the numbers.

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However, after MacLean's article was published, how did Enron make money and how the myth of Enron's stock rising continuously was created has become a question for countless ordinary investors.

This article can be said to have caused a stir. Enron was one of the hottest companies in the United States, and countless investors invested in Enron. When the question of how Enron made money came up, these investors were all waiting

An Ran's answer.

However, Enron did not answer this question.

In the face of doubts, Enron did not answer directly, but issued a few indifferent statements, as if to tell all media people that I really have a problem!

Next, the media relied on their strong investigative capabilities to piece together the story that Enron had invested heavily around the world in recent years, but had no profits or even lost money.

For example, Enron invested US$3 billion to build a power plant in India, but because the price of electricity was too high, the Indian government refused to purchase the power delivered by the power plant.

In this transaction, Enron was also cheated by the Indians.

India first draws a big picture, for example, how dynamic the Indian economy is, India has such a large population, and how big the market is. It will definitely make money by investing in India, etc., and then deceives Enron to build power plants in India.

The decision-makers of Enron were also stupid. They believed the Indians and believed that India was a big market, so they actually invested in India.

After the power plant was built, the Indian government said that the price of electricity from Enron's power plant was too expensive and asked Enron to lower its price, otherwise they would not buy Enron's electricity.

India's plan is that you have invested 3 billion US dollars and the power plant has been built. If you don't sell electricity, the investment will be in vain. So I will use this method to force you to lower the price.

India has cheap electricity.

Enron's idea is that hundreds of millions of people in India do not have access to electricity, and industrial production also requires electricity. If there is no electricity, the Indian people will continue to live in darkness, and your Indian factories will not be able to produce.

, you won’t be able to make money, and you will encounter problems with India’s development and economic growth.

Both parties believed that you wanted something from me, and as a result, things ended in a stalemate. One party just refused to buy it because it was too expensive, and the other party refused to lower the price!

In fact, this is a win-win deal. If both parties take a step back, Enron can make money and India can gain electricity.

As a result, both parties preferred to be confrontational, which ultimately resulted in a lose-lose outcome in which no one benefited.

This is actually caused by the difference between American thinking and Indian thinking.

American values ​​​​are more inclined to zero-sum thinking. It is believed that when one party gains benefits, the other party must suffer losses. The more benefits one party gets, the more losses the other party will suffer. The sum of the gains and losses of both parties is exactly zero, so it is

Call it "zero sum".

Americans have been the world leader for too long and are accustomed to profiting. They believe that their own profit is a matter of course, and that others' profit is their own loss.

It is also because of zero-sum thinking that Americans often wield the so-called "sanction stick", because in zero-sum thinking, the opponent's loss is one's own gain. If I sanction you, you will suffer a loss, which is what I earn.

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This is probably equivalent to, if I pierce your pocket and lose your mobile phone, it means that I have earned a mobile phone. It is the same magical logic as if you don’t pick up something when you go out, it will be lost!

"Win-win cooperation" probably does not appear in American dictionaries. And "kill the enemy by one thousand and lose eight hundred by yourself", in the eyes of Americans, means I earned you two hundred!

Driven by this zero-sum thinking, Enron did not agree to India's request. They would rather the power plant not operate and sit there slowly abandoned than lower the price of electricity.

Many states in the history of the United States have experienced power crises, which was probably caused by this zero-sum thinking.

When electricity consumption increases, the Chinese respond by increasing electricity supply to meet demand, while the Americans respond by raising electricity prices.

As a commodity, the demand for electricity has increased, so the price must be higher. If I still sell it at the original price, wouldn't I make a loss?

What I mean by selling at a loss here is not that I sold at a loss, but that I didn’t make more money.

In zero-sum thinking, I could have made more, but in the end I didn't make that much, so I suffered a loss. This is absolutely not allowed!

Americans have a zero-sum mentality and can only do business where I make money and you lose money.

Indians, on the other hand, can only let me make money from you, but not you from mine. In order to avoid letting you make money from mine, I would rather not make a profit, or even suffer some losses.

India is open to foreign investment, but the premise of openness is that you can invest, but you cannot make Indian money. If you are here to make Indian money, then sorry, India does not welcome you!

Investors are not fools and won’t let me make money, so why should I invest and do charity?

The final result is that investors give up the Indian market, and India also loses an investment, a lose-lose situation.

For example, the Indian Railways once issued a tender to renovate a railway in India, and a Chinese company won the bid.

India did not want Chinese companies to make this money, so it found a reason to cancel the bidding directly, and then started the bidding again, and added that only Indian companies could bid, and they wanted to leave the opportunity to make money to the Indians themselves.

As a result, the technology of the Indian company simply failed to meet the engineering requirements, so almost a few years later, the project is still stagnant.

India has done a lot of similar things, especially in terms of trade. It often imposes bans or increases tariffs. It is called this method to force companies to produce in India and boost India's industrial capabilities.

However, India needs raw materials but no raw materials, transportation is not available, workers are still lazy, and companies want to invest, so they really do charity. The result is that corporate profits have decreased, and India has no products available. India has succeeded in its own way of suffering losses.

harm the interests of other countries.

Of course, there are some leading companies that go to India to set up factories and invest, but only the companies themselves know whether they make any money in the end. Anyway, according to the latest news, Xiaomi, which is doing well in India, has just been fined 6.5 billion rupees.

The same is true for the Enron Power Plant. The Indians said, I would rather not use electricity, the people would continue to light oil lamps, and the factories would do manual work, but they would also force you to lower the electricity price.

This is very similar to the gangsters in Jinmen in the past. When collecting protection money, they stabbed themselves twice and then asked you if you were afraid! You are not afraid, right? Believe it or not, I will die at your door, with blood on your face!

One is zero-sum thinking and must not make less money; the other is really stupid, I would rather die than let you make money. The final result is that the power plant is directly scrapped, and Enron's 3 billion investment is all wasted.

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Enron has many other failed investments like this. In Brazil, the Philippines, Bolivia, and even in developed countries like Germany and Japan, Enron’s investments have all lost money!

The success or failure of these investment projects is easy to verify. For example, if the power plant in India is in operation, you can tell by looking at it. You can even make a long-distance call and ask local friends without spending any money.

Ask an accountant to check the accounts.

So the media quickly dug up the failure of Enron's investment projects.

So here’s the question, since Enron’s investments always failed, with billions of losses at every turn, how did you make the profits written in the financial reports?

If a company of Enron's size were to falsify its financial reports, it would be done so seamlessly that it would be impossible for a few accountants to find loopholes. Unless a national-level investigation agency intervenes.

Therefore, if we start from the perspective of financial report data, it is estimated that Enron's financial report fraud will continue to be concealed.

However, starting from the investment failure of Enron, it is easy to find that Enron's profits were falsely reported.

The eyes of the United States were focused on Enron, and countless accountants on Wall Street were looking for loopholes in Enron's financial reports.

The company that provides auditing services for Enron is Andersen Accounting Firm, which is one of the five largest accounting firms in the United States. The accounts they prepare can be said to be flawless, and it is not so easy to find loopholes!

However, precisely because it was in the spotlight and became the focus of public opinion, Enron did not dare to continue to make false accounts in the next financial report. Therefore, their latest financial report showed that the company lost US$618 million last quarter.

A loss of 618 million in a quarter is a loss of 2.5 billion in a year, which is not much for Enron's size.

But according to Enron’s financial report last year, Enron’s revenue last year was US$100.8 billion!

In just one year, from a profit of 100.8 billion US dollars to a loss of 2.5 billion US dollars, even the stupidest investors have already understood that Enron has a problem, and the problem is very serious!

…

In the conference room, a group of experts were having a heated debate about Enron.

Lin Mancang of Huafu Gas and Li Weidong both attended this seminar. After all, they are both parties involved.

"Judging from the information currently released by the media, Enron's earnings are definitely fraudulent. And news just came from the United States today that the U.S. Securities Commission has begun investigation procedures against Enron." A person said.

The expert spoke.

"I am also paying attention to the progress of the Enron incident." The second expert continued: "The project that Huafu Gas is responsible for this time is the technical support provided by Enron. Once there is a problem with Enron, it will be very difficult.

It may affect our project construction and cause delays."

"For such a large project, it doesn't matter if it's delayed for ten days and a half. What I'm more worried about is the direct shutdown of the project. If the project is stopped in the middle of construction, it will cause harm to our entire West-East Gas Transmission Project. This

At one point, we have to guard against it!"

The person who expressed his opinion this time was an older expert. He looked like he was recalling the past, and then said: "I have personally experienced similar things. In the late 1950s, we had many projects because foreign engineers withdrew.

We have no choice but to stop. Some of these projects have never been recovered after stopping! We must learn lessons!"

Some people also expressed different opinions: "Enron's investigation does not affect Enron's ability to provide natural gas pipeline technology to the outside world. Even if Enron really commits fraud and is even punished, the punishment will not take away Enron's natural gas pipeline transportation."

technology."

"You are right. Whether Enron made false accounts or was punished, Enron's natural gas pipeline transmission technology is the best in the world. As long as Enron continues to provide technology to Huafu Gas, it will not affect the project.

Construction." Another expert said.

After listening to the opinions of these two experts, Director Wang looked at Lin Mancang and asked: "Mr. Lin, can Huafu Gas guarantee Enron's technology supply?"

"Of course, we, Huafu Gas, have signed a contract with Enron Company." Lin Mancang nodded without hesitation, and then said:

"The scandal of false accounting will affect Enron's credibility, but it will not affect Enron's technology. As long as Enron does not go bankrupt, they must provide us with technical support for natural pipelines in accordance with the contract, so our

Project construction will not be affected!"

"But what if Enron collapses?" asked an expert nearby.

"Hahahaha!" Lin Mancang couldn't help but laugh, and then said slowly and confidently; "How could Enron collapse? To put it bluntly, even if our Huafu Group collapses, Enron cannot collapse!

"

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