I have described the ethical and governance issues of the Enron scandal that took place in 2001. In this paper, there is information about the way things went the way it did with the Enron scandal. They hide a lot of documents pertaining to how their profits increase so rapidly. It also includes the close link Kenneth Lay had with George Bush. The investigators had some help with what happened in the scandal of Enron. Enron scandal at a glance
Enron had grew from nowhere to becoming Americas seventh largest company in just 15 years, employing 21,000 staff in more than 40 countries. They lied about their profits and were accused of a range of shady dealings, including concealing debts so they didn’t show up in the company’s accounts. They had an insider by the name of Michael Kopper whom which spilled the beans about Enron’s murky finances and he also plead guilty. “ In 2006, a federal judge who heard Kopper testify sentenced him to 37 months, compared with the 15 year maximum term he agreed to in his plea”- Los Angeles Time.
During the investigation, Enron salvaged its business by spinning off various assets. There were hundreds of U.S firms who used so-called aggressive accounting methods in order to keep debts or one-off charges away from the headlines figures that were offended. President George W. Bush had passed a tough bill aiming at cracking down on corporate fraud, ordering a review of U.S pension regulations. Enron: The Real Scandal
Kenneth Lay, Enron’s chairman/CEO, had a close link with George Bush and other Texas republicans. Lay and other Enron bosses made calls to administration officials begging for help. There is also talk going around about how the congressman was collecting campaign money from Enron. As a matter of fact, three quarters of the Senate took cash from Enron. Enron’s auditor has admitted to an “error of judgment” in the treatment of the debt of one of Enron’s off-balance sheet vehicle. Because of Enron’s situation, the SEC believes there is a need for systemic reforms in three areas.
First is the regulation of auditors. Second is the urgent need to eliminate conflicts of interest in accounting firms; lastly is Americas accounting standards, GAAP standards used to be thought the most rigorous in the world. Second is Andersen, the company’s firms collected $25 million from Enron, but it earned even more for consulting and other work. The accounting firms is trying to limit or stop the undertaking of consulting work for audit clients because they claim that there is no real conflict of interest. Lastly, it is said to be that if Enron was going by the British standards then they would not have been able to overstate its paid by so much. Enron: The Rise and fall of Enron
It is said to believe the motives and attitudes behind the Enron downfall is individual and collective greed born in an atmosphere of market euphoria and corporate arrogance. They should have known something wasn’t right when Kenneth Lay announced his retirement in February 2001 and then he named Jeffrey Skilling president and CEO of Enron. In the same month that Skilling was named president and CEO, he also held the company’s annual conference with analysts, bragging that the stock (then valued at $80) should be traded at $126 per share. After that the stock kept on decreasing and decreasing. On August 14, just six months after being named CEO’ president, Skilling himself resigned, claiming that he resigned for “personal reasons”. Enron: Who’s Accountable?
Enron’s lawyers gave the workers who audited the company’s books an extraordinary instruction, which was to destroy all audit material, except for the most basic “work paper”. If Enron hadn’t destroyed all of their emails, and other electronic or paper files then the FBI investigators, congressional probers, and workers suing for the loss of their retirement savings would have won. Enron was putting them deeper and deeper into a hole because prior to...
Please join StudyMode to read the full document