The Fall of Enron

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The film Enron: The Smartest Guys in the Room was a great film loaded with examples of unethical behavior with Enron being an unethical corporate culture. The film portrays the rise and fall of Enron, one of the most corrupted corporations this country has seen. Enron had started off as a promising energy company with a vision to do good which quickly turned sour when top executives torn the company down while stealing millions of dollars from people. A reason for the downfall of Enron was the deregulation of electrical power markets which fueled the greed of Enron’s officials. They were the ones that transformed Enron from a traditional energy company into an energy broker. As I was watching the film, the first example of unethical behavior I noticed was the scandal involving the oil markets. This scandal occurred early in Enron’s history with a couple of traders placing bets on the oil markets. This assisted in consistent profits for the company. They would then divert the money to offshore accounts with phony books. When this scandal was made public, Ken Lay (Kenny boy) denied having any knowledge of the corruption. It was obvious that Lay was lying through his teeth about the traders gambling away Enron’s reserves. This was difficult for me to watch as I am very familiar with the Lay story. Lay is a brother of Beta Theta Pi, the same fraternity I belong too. While our brothers are all held to very high standards when it comes to integrity and trust, Ken Lay did not live by these values. He had been president of his respective chapter and it just goes to show you that anyone can be corrupted. Enron then began using an accounting scandal known as mark-to-market accounting which allowed Enron to predict potential profits rig... ... middle of paper ... ...ow being sold for “pennies”. People like Skilling and Lay had temporarily managed to escape with everyone’s money. Due to the Enron scandal, we now have laws such as the Sarbanes-Oxley Act in place to keep a similar event from reoccurring. As a result of SOX, top executives now had to individually certify the accuracy of financial data. It also increased the penalties for financial fraud. So what did we learn from Enron? Every company has duties to all of its stakeholders, not just to its shareholders. At Enron, executives made decisions that were both unethical and illegal. For a business to prosper, it all starts at the top. A strong leader has the vision and capability to get the company to where everyone wants to go. They must be able to provide the basis for people to achieve this goal. This will result in a healthy company culture which Enron did not have.

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