The Enron Company’s Ethical Crimes Case Study

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Enron’s corporate culture had little regulators and system monitors to balance the goals of the company and expected behavior when handling business environment risks. The managers did not find it necessary to monitor the employees and blindly trusted them to handle any risks against the interest of the company.

Enron’s bankers, editors and attorneys conspired to support the fraudulent dealings despite their ethical responsibility of maintaining integrity in the company. They deviated from the main goal of the business and failed to take into consideration the shareholders’ interests when supporting the decisions and contracts that were proposed by the top management (Ferrell, Fraedrich and Ferrell 2011). They allowed the top management of the company to use complex nature of the financial statements and the weaknesses in the accounting standards to manipulate the financial records with an intention of enriching themselves. From an ethical perspective, they conspired with the top management to inflate the asset values, overstate the reported income and cash flow and eliminate the liabilities from the financial records. Specifically, the attorneys negotiated dubious investment contracts for the company. These investments incurred losses which were never reported in the books of account of the company (Ferrell, Fraedrich and Ferrell 2011).

The ethical crimes committed by the chief financial officer of the Enron Company include conspiracy, securities fraud, false statement and insider trading. Based on the code of ethics, it is clear that the manager breached all the ethical principles. The manager involved in the scandal was competent but did not exercise professional due care and apt professional behavior. In addition, the manager did not exercise integrity when preparing the financial statements (Ferrell, Fraedrich and Ferrell 2011). This means that he lacked integrity and objectivity in running the organization.

References

Ferrell, O., Fraedrich, J., & Ferrell, L. (2011). Business ethics: ethical decision making and cases (9th ed.). New York, NY: Cangage Learning.

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