OMM 640 Business Ethics and Social Responsibility Prof. Tricia Devin
Corporate Scandal in America: Week 6
March 17, 2012
COROPORATE SCANDAL 2 The unethical business practices of Enron, Leman Brothers and Bernie Madoff caused severe financial losses for the American people. These catastrophes could have been prevented if more stringent ethical safeguards were in place and enforced within the walls of the financial institutions. Millions of business transactions occur every day. These transactions, if not policed by local and federal authorities, have the potential to knock the American economic structure off balance. In the last decade, three note-worthy scandals have nearly destroyed the American financial business, our employment rates and our way of life. The Enron scandal, Lehman Brothers and the infamous Bernie Madoff, have forever changed the way we do business. These scandals are even more damaging to the United States because they were perpetuated by our own elected officials, who willingly and knowingly accepted contributions and other forms of payment in exchange for their legal leniency (Nichols, 2002).
Enron was an extremely powerful corporation based in Houston, Texas. In addition to its other businesses, they became a key player in the brokering of energy supplies in the United States. Enron grew to be very influential in the local communities, state and government regions by using its deep pockets to fund its agendas (Lavelle, 2001). Enron used its power and influence to hire the best lobbyist’s money could buy. It was reported that “Enron supplied corporate jets for Bush's entourage as it crisscrossed the country COROPORATE SCANDAL 3 last year, and it is near the top of the list of President Bush's campaign contributors. The company and its employees gave $1.3 million to the GOP campaign effort” (Lavelle, 2001). Apparently this influential partnership was not contested by many people in Washington because both Democrats and Republicans were somehow benefiting from Enron’s success. The deregulation of the energy market, the support of tax shelters to hide their illegal business transactions were all supported by their constituents (The Real Enron Scandal. (2002). New Republic, 226(3), 7). Enron’s influence allowed them to buy political privileges. Kenneth Lay the company’s CEO was “…the only corporate executive whom Vice President Cheney said he met with one on one to discuss formulation of the administration's national energy policy. And throughout the administration's work on the energy blueprint, Bush's senior adviser Karl Rove continued to hold $100,000 to $250,000 in Enron stock” (Lavelle, p. 28, 2001) These privileges were ultimately abused by Enron and its CEO Kenneth Lay. We cannot assume that high government officials were not aware of Enron’s deceitful practices. American President hopeful Ralph Nader has been warning Washington of its pitfalls with its current corporate/political partnership and pointed out that our system, “…permits corporate political action committees to buy government favors in the form of deregulation, lax regulatory oversight and economic globalization” (Nichols, p. 16, 2002).
COROPORATE SCANDAL 4
When the Enron scandal was made public millions of people realized how devastating this self serving partnership really was. From employees and investors losing their entire savings, to the manipulation of the energy prices in California, Enron was the biggest player in corporate crime that America has seen. Its crimes were so severe that Nadar exclaimed,...