![]() ![]() CAO had an enviable cash rich position as a monopoly delivering jet fuel to China, but turned out to be rubbish at trading. ![]() ![]() But with oil prices staying obstinately high for almost the whole of the past year, the company was eventually forced to announce a $550 million loss just before Christmas.Įnron was a great trading company, which failed badly at everything else, including a very expensive broadband venture and the building and operation of international power stations. The CAO case is broadly similar, with two traders in the company persistently betting that oil prices would go down by shorting oil futures. Technically, the nature of CAO’s collapse is more similar to the collapse of Barings Bank in the early 1990s when Nick Leeson kept doubling up his bets on the direction of the Nikkei, eventually crashing out when the Kobe earthquake finally quashed his desperate hope of an upturn. The two cases throw up some interesting issues. ![]() The brilliant account of major corporate wrongdoings in the US comes at a time when many Chinese companies have been shown to be flawed, including the recent case of Singapore-listed China Aviation Oil. Bethany McLeans’s and Peter Elkind’s ‘The smartest guys in the Room’ is the must-read story of Enron’s rise and fall. ![]()
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