ETHICS AND THE FALL OF ENRON

Ethics and the fall of Enron

Ethics and the fall of Enron

On October 21, 2001, one of the largest energy companies in the world filed for bankruptcy after restating their earnings report for the past two calendar years. Enron, the energy conglomerate had to restate its earnings because of severely inaccurate book keeping of nine billion dollars. Clearly, the U.S economy had heroic success during the mid to late 90's. More specifically, the economy had grown because of the influx of the modern technology, extremely low unemployment, and consumers spreading their wealth into long-term investments via the stock market. Many of those investors enjoyed rapid returns on investments; meanwhile Enron had been deceitfully taken their investors money and lining their personal bank accounts and increasing personal wealth to enormous heights. During this research, it was very clear that the corporate CEO's and CFO's had in fact reported fictitious earning reports. This paper will cover the following:

(1) Unethical climate at Enron

(2) Delineation of regulation, its reason, and the exact illegal undertakings of the Enron Corporation and associates.

Let us first delve into the meaning of ethics and look at what expert in business ethics, Linda Trevino has to say about corporate ethics.

In her publication, Managing Business Ethics, LindaK, Trevino discusses the issue of ethics and her definition states, “It is the role of every CEO to ensure sound ethical practices are enforced from the top down. Ethics are behaviors and guidelines for employee's actions. It is a moral guide for conducting and engaging in day-to-day business. In a sense, it is doing what is right. The leaders must demonstrate to all employees what ethics is all about in the business environment" (p.189). This statement has lasting implications and is the foundation upon which many businesses operate. However, in the aftermath of the recent economic boom, many analysts have suspected unethical practices at some of the world's largest companies.

According to Barbara Ehrenreich, scribe of, Nickel and Dime, "Our business CEO's have gone from rocking to reeking in a meager two years. At the height of the dot.com bubble, when they had won distinguished awards--that of ethic and credible "role models" and even "icons", many investors hastened to offer their life savings via the stock market"(p.3). This statement has plenty of credibility, after Enron, WorldCom, Adelphia, and a few others rebelled against common decency, and only at the risk of not being caught in unethical situations. Unethical practices have surfaced increasingly over the past two years. Many more companies like the above-mentioned companies have lost tremendous credibility in today's financial market place. Lastly, leaders of these multi-billion dollar company's must take the leadership role by adhering to ethical practices and its own Codes of Conduct that they issue. The Code of Conduct is an operating procedure that dictates how each member of the company is to adhere to organizational standards. Now that we have an understanding about what type of corporate ethical issues we are dealing with, let us look into ...