Ethics in the Enron Company Essay Example | Topics and Well Written Essays - 750 words

Ethics in the Enron Company - Essay ExampleMore reprehensible is the attempt of the book binding integrated hierarchy to feign total innocence throughout the investigation and blame everything on their subordinates. In the light of the Enron scandal, the US Congress immediately passed a equity that would reform and revamp corporate practices in the country. Background The History of Enron Enron began as a small energy company in Houston in 1985 founded by Kenneth Lay. The subsequent deregulation of the energy market gave the company an opportunity to expand into energy related ventures and fine soon Enron catapulted itself into the worlds largest fiscal and energy trading company. Its $10 million electricity gross sales in 1994 ballooned to $4 billion just 3 years later and in 1998, the companys asset was reported to reach $23 billion (Solomon 34). It did businesses in various markets and industries and provided and traded internationally in the sideline energy resources and co mmodities financial and risk management services, and electronic commerce (Joint Committee on Taxation 200355-56). In a move that shocked the business world, which by then was one of Americas ex largest companies, filed a Chapter 11 bankruptcy on December 2, 2001. A few months earlier, Enron had been the subject of an investigation by the Securities and Exchange Commission (SEC) after it had publicly reported a $618 million third-quarter loss as tumefy as a $1.2 billion decrease in shareholder equity. Enrons seemingly sudden financial debacle took the world by surprise because accounting records released quarterly by the company did not in any way reflect its ailing financial condition (Joint Committee on Taxation 200355-56). interchange Ethics and Enron Subsequent investigation into the Enron case by the Justice Department revealed a pattern of dishonest practices employed by Enron to show off a facade of financial wealth and stability. These fraudulent practices include exagge ration of earnings in its reports, concealment of debts and losses through the use various subsidiary partnerships. In the wake of the Enron scandal its top officers were charged and convicted with various offences including fraud, conspiracy, insider trading, and money laundering. Lay, who was convicted of a total of various corporate offences died before his sentence could be served while Skilling, the companys COO, was punished with imprisonment for a salutary number of years. In addition, various offices who rendered services for Enron were also not spared such as Vinson & Elkins, Enrons Houston law firm, which was made to pay $30 million to Enron for providing erroneous advice to the company Merrill Lynch, a brokerage and investment firm, which was staged to pay $80 million to SEC, and Arthur Andersen, Enrons editor, who was barred from further practicing in auditing and charged with obstruction of legal expert for the destruction of Enron auditing documents during the inves tigation (Ferrel et al 2010 420-425). Lay and companys primary defense strategy was to reject that Enron committed any wrongdoing and instead blame everybody, such as an adverse media, market affright and short-selling, but themselves. Moreover, the top corporate hierarchy often claimed innocence of what was going on and blamed their