Business Ethics Enron Report

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Business Environment

Business Environment

TABLE OF CONTENTS
INTRODUCTION: EXECUTIVE SUMMARY3
RATIONALE OF THE PROJECT3
MAIN OBJECTIVE:3
METHODOLOGY3
THE ENRON STORY: BRIEF4
HOW AND WHAT TYPE OF FRAUDS WERE COMMITTED?5
THE ROLE OF STOCK OPTIONS5
THE USE OF OFF-BALANCE SHEET PARTNERSHIPS5
Example: LJM5
Chewco6
LOBBYING6
ACCOUNTING PRACTICES6
DIFFERENT ETHICAL DIMENSIONS7
SOCIAL DIMENSION8
AFFECTS ON EMPLOYEES AND SHAREHOLDERS8
ENRON INDIA8
AGGRESSIVE NATURE OF ENRON: PERSONAL ETHICS8
ENRON’S ARROGANCE: PERSONAL ETHICS9
EXECUTIVES ABANDON ENRON9
POLITICAL DIMENSION: SYSTEMATIC EXPLANATIONS9
ECONOMIC ISSUES10
ENRON INDIA: DHABOL PROJECT10
FATE AND RISKS OF OPIC10
CALIFORNIA'S DEREGULATION AND SUBSEQUENT ENERGY CRISIS10
PEAK AND DECLINE OF STOCK PRICE10
EFFECT OF BANKRUPTCY ON ENRON'S RETIREMENT PLANS11
ENVIRONMENTAL DIMENSIONS12
BOLIVIA12
ENRON INDIA:12
LEGAL DIMENSION: SYSTEMATIC EXPLANATION OF ETHICS12
LACK OF REGULATORY CONTROLS12
ENRON INDIA13
INDIAN SCAM: Home Trade truths13
HOME TRADE LAUNCH14
HOME TRADE FRAUD14
DIFFERENT ETHICAL DIMENSIONS14
LEGAL AND POLITICAL ISSUES14
FAULT IN THE SYSTEM15
REGULATORS & MEDIA REMAINED UNCONCERNED15
ECONOMIC ISSUES15
RECOMMENDATIONS15

INTRODUCTION: EXECUTIVE SUMMARY
Until its collapse in the fourth quarter of 2001, Enron Corporation was the world’s dominant energy trader, accounting for about one-quarter of all energy trading in the United States. By pioneering the development of large-scale energy trading, Enron was able to transform itself from an “old economy” gas pipeline operator to a “new economy” financial intermediary and market maker. In the process, Enron’s revenues grew from $13.5 billion in 1991 to a reported $100.8 billion 10 years later. During the last five years of the millennium, Enron delivered a 507% total return for its shareholders, and for many years it was a regular and prominent member of published lists of America’s most admired and innovative companies. At the beginning of 2001, Enron’s market capitalization was $62.5 billion. One year later Enron’s stock was worth only pennies to its unfortunate shareholders, and the company held (at the time) the dubious distinction of being the largest bankruptcy in American economic history. A corporate icon of the 1990s had not only collapsed swiftly but also ignominiously—revealing a trail of frantic efforts to hide losses. In the process, Enron’s bankruptcy left thousands of committed employees without jobs and, for those with large holdings of Enron’s stock in their 401K plans, no hope of restoring their post-retirement nest eggs. We would discuss Enron’s history and modus operandi that shed light on perplexing and, ultimately, complicated questions. We would also discuss about the Social, Economical, Political, Legal and Environmental impact on the activities undertaken by Enron and the Downfall and bankruptcy of Enron. RATIONALE OF THE PROJECT

With more and more companies thriving to excel and create a space for them in global environment it is important to understand why is “Ethics in Business Environment vital for survival”. As seen in the ENRON case, the company tried every unethical way to survive but eventually had to file bankruptcy leading to loss not only to the stakeholders but innumerous employees of the company. The company not only operates in the business environment but also affect social, political and ecological environment. MAIN OBJECTIVE:

“Discuss ethical issues in Enron and an Indian scam”
Underlying objectives are:
1) Understanding the rise and fall of Enron.
2) Analyzing how Enron earned that much money and how it did all the scams. 3) Understanding the Economic, Social, Political and Environmental dimensions of the consequences of the corrupt practices and the downfall of Enron. 4) Analyzing an Indian Scam, Home trade and comparing it with Enron...
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