1. Enron’s directors realized that Enron’s conflict of interests policy would be violated by Fastow’s proposed SPE management and operating arrangements because they proposed alternative oversight measures. What was wrong with their alternatives?
2. Ken Lay was the Chair of the Board and the CEO for much of the time. How did this probably contribute to the lack of proper governance?
3. Why didn’t more whistleblowers come forward, and why didn’t some make a significant difference? How could whistleblowers have been encouraged?
4. What should the internal auditors have done that might have assisted the directors?
5. What conflict of interests situations can you identify in:
6. Why do you think that Arthur Andersen, Enron's auditors, did not identify the misuse of SPEs earlier and make the board of directors aware of the dilemma?
7. How would you characterize Enron’s corporate culture? How did it contribute to the disaster?

An understanding of the nature of Enron’s questionable transactions is fundamental to understanding why Enron failed. What follows is an abbreviated overview of the essence of the major important transactions with the SPEs, including Chewco, LJM1, LJM2, and the Raptors. A much more detailed, but still abbreviated, summary of these transactions is included in the Enron’s Questionable Transactions Detailed Case in the digital archive for this book at www.cengagebrain.com. Enron had been using specially created companies called special purpose entities (SPEs) for joint ventures, partnerships, and the syndication of assets for some time. But a series of happenstance events led to the realization by Enron personnel that SPEs could be used unethically and illegally to: