While the collapse of Enron last year - the biggest in US corporate history - has captured all the headlines, other energy companies such as Dynegy, Reliant Resources, Duke Energy, Halliburton and CMS Energy are also under investigation, which indicates that dubious accounting practices in the energy industry is more widespread than previously imagined.
Some of the practices include "roundtrip" or "wash trades" in which companies buy and sell commodities at the same price. Such trades boost revenue but have no impact on profitability.
Dynegy's new interim chairman is Glenn Tilton, the vice-chairman of Dynegy's 26.5 per cent owner ChevronTexaco. This has prompted market speculation a bid for the energy trader might come from the oil giant, which already has an option to move to 36% ownership of Dynergy.
According to industry observers, with their creditworthiness being questioned by credit rating agencies, all energy companies will now have great difficulty tapping the investment community for funds as investors take fright.
