Enron and Arthur Andersen

Introduction1

Discussion2

Statement of fact2

Enron's history2

Arthur Anderson and Enron scandal4

Key people involved in scandal5

Ethical dilemmas7

Components of unethical behavior contributed in Enron7

Conclusion9

References11

Enron and Arthur Andersen

Introduction

It is known that Enron went bankrupt around ten years ago and disappeared from corporate world, but ethical standards affected by Enron case are not forgettable. The fame Enron earned in the world during 16 years of struggle and established its asset value from USD 10 billion to USD 65 billion, took less than a month to go bankrupt (Mclean & Elkind, 2004).

The company who was once ranked 7th largest company in fortune 500 and also ranked 6th among largest energy businesses in the world. In December 2001, Enron filed for bankruptcy protection in the biggest bankruptcy case in United States at that time (Jennings, 2009). In November 2001, Enron's stock was at its lowest price of USD 1, which has been traded for USD 90 in good days of the company. This condition of Enron brought disaster to investors and employees of the company (Skilling V. United States, 2010). As a result to bankruptcy of Enron, thousands of its employees lost their pensions and jobs, the Enron bankruptcy also affected investors as they lost billions of dollars invested in Enron.

The scandal of Enron also left an ugly deep scar on the face of modern business. This paper investigates the major factors in Enron scandal and also the ethical issues involved with Enron scandal will also be discussed. There are various components of the paper, first part of the paper analyses the facts and happening to Enron and in the later part the paper the role of Arthur Andersen. In the last the Enron's culture will also be discussed, major people that are involved in the scandal of Enron and the ethical issues that are present in the scandal will also be analyzed.

Discussion

Statement of fact

Enron's history

Enron was founded in 1985 as interstate pipeline company, they also been a power supplier to state utilities. The business started with merger of Houston Natural Gas and InterNorth based in Omaha. Business operations of Enron grew rapidly and in short span of 20 years Enron became world's largest trader of energy. Enron awarded with various praiseworthy titles at the end of twentieth century such as “the world's most admired corporations”, “one of the world's leading electricity, natural gas, and communications companies”, and so on (Skilling v. United States, 2010).

Due to increased competition in energy sector, energy decided to diversify its operation and invest internationally to sustain the market position of the business. In fact, the activities undertaken by Enron led to incur losses rather than profits. The incursion of Enron in broadband and fiber optics market during 1999 was actually a wrong decision that led business to incur huge losses again. During this time span Enron incurred with huge losses and went into financial distress. It is also a fact that Enron did not disclose its losses until end of 2001. On the other hand Enron attained extraordinary bottom ...