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Enron And Ethics Essay

Having some detailed written code of ethics like Enron had is usually not enough. Enron had a 64 page code of ethics and incase you might be wondering, the pages were not blank. However, despite this, it went down. The organizations ought to infuse some integrity and ethics in their corporate structure and in their success definition. To be precise, Enron ethics were simply ignored by the management and the employees. In any organization, the functions of any department should be based on ethical values, competence, integrity and a clear accountability of financial matters.

Enron totally ignored these functions thus leading to its bankruptcy. As the company’s reputation did grow globally, hence there was competition of the employees therefore leading to individual greed and also the generation of egotism in the company. Every employee wanted to earn more, achieve a lot and hence there was the high motivation by the company to succeed. Such an atmosphere leads to a tendency to distrust people as everybody is concerned with their personal interests. There were so many dealings in the finance section hence the company’s goals were underestimated as well as the business ethics.

Therefore it is imperative to give an immense background on Enron’s collapse and various views that can be deducted from its collapse. Enron’s, history, collapse the whistleblowers and conflicts The main issue which led to its downfall lay comfortably in the department of the operations management. At one time the company was receiving lots of praises from outsiders and then it was mounted with a decentralized control in the finance sector and also their decision structure gave an unclear and illogical picture on the activities of the company and its operations.

Enron Corporation was one of the largest companies in Houston, Texas which used to sell natural gas, electricity and also distributed energy. It also offered other services for example bandwidth interest connections as well as offering financial services and providing management of risk services globally. The company gradually became powerful due to its initiative marketing strategies as well as the endorsement of communications and power bandwidth services and the offshoots of risk management.

All these services got supervised by the department of operations management and other departments. Though the functions of these departments were executive in their nature, there was however lack of responsibility, integrity, control and creativity. The absence of these vital ethics did lead to the entire bankruptcy of the whole company. Kenneth lay who died three months before he was to be finally sentenced was the founder of Enron in the year 1985. He initiated the electricity sale and then afterwards US congress did pass legislation on the deregulation of natural gas.

Enron before its collapse could report some annual revenues in the year 1990 of $ 10 billion and in the year 2000 to about $ 101 billion (Mark, 2002). In October 2, 2002, early in the morning, Andrew, Fastow who was Enron’s former chief and the financial officer did voluntarily surrender to the FBI agents and was led in hand cuffs to the car trailed by the television cameras and reporters. He was later taken to federal house and was charged with mail fraud, securities fraud, conspiracy, and money laundering.

He was sentenced for ten years (Loren, 2003). In the 1990s, Enron was a universal lauded company that did transform all the old businesses and started creating new ones. However, the criminal complains did cap disclosures and revealed that it was poorly managed and had amplified its reliance on some convoluted business ordeals in order to maintain growth objectives and encourage some unbridled ingenuity that resulted to fraud. It is patent that the company had some poor internal controls and unreliable top managers.

Enron came crushing in 2001 and filed for what could have been termed as the nation’s vast bankruptcy. What were the main causes of its down fall? First the financial statements of Enron were not transparent and did not give a clear detail on the finances and operations with analysts and shareholders. Second it had a complex business model that actually stretched on the accounting limits thus required the company to use the limitations of accounting in order to manage on its earnings as well as modify on its balance sheet to limelight a constructive depiction of its whole performance.

It is completely patent in the Enron movie; these scandals had grown tremendously out of some steady accumulation of the values. Habits and actions that had already began many years before later going out of control. The top managers who were the whistleblowers like Jeffrey Skilling who was the chairman and Andrew Fastow contributed to the downfall. The auditor, Arthur Andersen, also got accused of reckless application standards in the audits out of conflict of interest over the vital consultancy fees that had been generated by this company. Finally, in November 28, of 2001, Enron was declared bankrupt.

The company lost confidence in its investors and at the end had very little cash to run business and satisfy some hefty debts. Trade secrets and privacy in Enron Trade secret is by definition any information that the company keeps as a secret in order to offer them an advantage over other competitors. Basically Enron was a multi billion dollar company that had assets that were far flung that did rival those of other companies and countries thus there had to be some information on their weakness in order to bring them down that was unknown to some average citizens.

According to Debka, the first hidden weakness of Enron was based on finance which could have made the competitors destroy the company fast. Enron hid hefty blocks of liabilities from investment company’s eyes through creation of shell companies to which they were basically shuffling debts. Since the outside companies had no tie to this company, there is no one in the investment community who realized how immensely in debt Enron was and how it was affecting on its pictures of profitability.

The Enron executives knew that if this information if it was made public then the investors would end up selling their stock. Enron basically had to hide some hefty liabilities in their shell company to show the investors that they were still at a profit. The second weakness it had was the fact that it held some contracts on foreign soil thus depending on those countries to pay all their bills according to the agreement. All the conflicts of interest of this company were finally not solved as they accumulated and led to bankruptcy.

All this later led to court cases where the convicts were sentenced. All this shows there was some extent of privacy. Kenneth lay already knew that Enron was undergoing some financial trauma but still went ahead to lie to the shareholders and the investors that the company was at its best shape. They kept their financial crisis a secret. Honesty and Enron The moral demand of transparency as well as honesty is the foundational principle in investing in the free markets.

Any decision of any corporation to ignore some moral demands that are based on transparency and honesty in their financial arrangements should never be used like an excuse to smother the spirit of the entrepreneurial in aggressive situations (Philip, 2001). Analysts and the commentators analyzed on the hinge matter that led to the down fall of Enron. It is lucid that the demise of Enron did not lie in the deregulation of electric power but in some questionable practices of accounting by the company. Thus we can denote that honesty which is an ethical principal was not curtailed.

Despite their higher earnings, in 2001 Jeffrey Skilling resigned for some disclosed reasons and Enron reported a loss of $ I billion because of poor performance. Despite the angle you look at the whole phenomenon, it is quite clear that there lacked honesty at Enron. In the documentary ‘Enron: the smartest guys in the room’ it depicts on some o the social evils like hubris, greed and lies that did bring Enron down. The film does a tremendous job of digging up a lot of dirty acts where the whistle blowers could tell some plain lies to the government, investors, and employees and make it sound very good.

Virtues and Enron Despite the mischievous and questionable deeds by Enron, failing to credit them for some charity work they did will be questioning on our ethics too. Most media reports have reported on some good work that was done by Ken Lay, who is the former Enron’s CEO. With his family he gave generously to the church through the family’s charitable foundation which did hold over $ 50, 000,000 of all Enron stock in the year 2000 (Tim, 2010). Enron made some sufficient donations to the legitimate charities. (Francis, 2002). Utilitarianism and Enron

Some theories and principles can be used to give an inner analysis on the situation at hand that led to this failure. Utilitarianism theory by John, Stuart Mill, does offer some straightforward method of approach in deciding the morally right action for all situations we find ourselves in. This is a theory that does consider what is good for everybody. To discover what we ought to do, we should identify first the divergent courses of actions that can be performed in the situation and all the future benefits as well as harms that can mount from that.

Utilitarianism states that we should always take the course of actions that offers the most benefits when the costs have already been taken into full account (Manuel et al, 1989). In this case it is patent that utilitarianism concept was never used. The company since it already knew that it was going down to the drains could have come up with a strategy that was rational to save them from the predicament instead of fooling those around it that it was enjoying some benefits. They could have used this theory to look unto the future possibilities and work towards attaining sustainability.

They should have been a global responsibility to advance in their financial aspects (Yvon, 2003). Egoism and Enron Unlike Utilitarianism, egoism theory states that individuals should only act to their own best interest and self interest. Egoism is basically not effectual for solving the moral conflicts. In Enron Company most people got away with this theory. Egoism is only based in addressing concerns that are based on satisfying our own desires and getting what we really want (Jelena & Kristijan 2008).

The employees at Enron lost their jobs and life savings and the higher executives cashed in millions and received other millions in the bonuses for all the stock inflation thus bringing the company down. There were blatant interest conflicts that were overlooked, members of the board received hefty gifts from executives, millions were spent to discourage oversight and government regulations and warnings from within were ignored (Lawrence, 2002). That is pure egocentrism that should be discouraged in the workplaces.


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