The movie “Enron: The Smartest Guys in the Room” describes a real-life story of a company that was very successful and then went bankrupt. Enron was one of the world’s largest and most profitable companies. The specialization was in electricity and gas. But the fact that it stayed seemingly successful and in the positive, was false. It turned out that there were a lot of discrepancies in the accounting books.
The losses were hidden and the profits were fabricated. When the company expected to have a crisis it somehow avoided it, at the same time gaining financials. The most shocking thing for everyone was that a company with such a reputation and stable assets could end its existence so quickly. As mentioned in the video it took six years to reach its peak of development and only 24 days to go bankrupt. The cover-up of losses was going on for such a long time that it became impossible to reverse the effects. Many investors and private people lost a lot of money due to Enron’s bankruptcy. Not to mention the twenty thousand people who lost their jobs through no fault of their own.
The crash started when the records were analyzed and it was clear that some were grossly falsified. There were two sets of accounting books. Also there were offshore accounts, which would be used to hide the losses and then there were other accounts where the people responsible would collect their illegally acquired financials. There is even an example of several hundred companies being registered to one address.
A clear sign of problems was evident when the blackouts began and the situation with California became known.
It was much unexpected that such an organization would exploit the resources of a state in such a way, which could turn out to be so detrimental to the people. The video talks about the primary stakeholders and the outcomes that they faced. These are the people who were directly affected by the financial fluctuations and the investing of the company. These people were directly influenced by the manipulations that took place. Several telephone calls were recorded where it is possible to see what they did and what their attitude was. It makes it clear that they were not interested in the future of the company and that they felt in no way responsible. All their focus was on gaining more money based on personal greed, no matter what the consequences of their actions would be for the people working in the company or the company itself. Tertiary stakeholders are those who are not affected directly by the manipulations and fluctuations.
These individuals are still very much involved in the matters of the company and can affect the opinions and decisions being made. It is clear that many people were involved in the flourishment and the downfall of Enron, having different roles in the process and changing the final picture of the company.
As ethics and respect were largely involved in the case of Enron, there are several ways that this situation would have to be dealt with. The people who used the company and its resources would have to be held responsible for their actions. Those who selfishly acted in their own interests would have to be punished.
Depending on the level of involvement and the severity of the damage inflicted upon the company, they would either have to be fired, pay the fine or face any other punishment sufficient enough for their actions. The primary stakeholder would be the largest group affected. As they were the people directly responsible and gained the most out of the falsification, a lot of them would be penalized or fired. It would be easier to trace their steps and manipulations, as they were the primary reward receivers compared to the rest of the employees.
A tertiary stakeholder is somewhat a different story. These people’s opinions and actions are not so evident and affect the structure and the direction that is being taken. Their involvement is not so clear to see and so a lot of records and transactions would have to be analyzed to find any irregularities and the influence that they had. Because the tertiary stakeholders are somewhat distanced from the direct benefits and negative effects of the decisions, they would be less involved in the corporate fraud and thus be thought of as people who are more interested in the future of the company. Their gain does not happen that quickly compared to the primary stakeholders and so it would be wise for them to invest in a beneficial way and strengthen the company, instead of trying to pull every known resource out of it. Close control and constant reporting would create a more structured environment.
Another route that could be taken is to carefully choose who is in charge, the “elite” of the company.
These people had the greatest access to the information and thus had the biggest control. A division of responsibilities through the establishment of more departments would lower each person’s individual impact on the whole company and make it practically impossible to have such a devastating effect.
It is obvious that the case of Enron was a display of human greed and how the corporation or any other organization would break down and affect a large number of people, if several individuals within that company do everything in their own interests, forgetting about all else.
References
Gibney, A. (Director). (2005). Enron: The Smartest Guys in the Room. [Film]. United States: Magnolia Pictures.