An Ethical Analysis of the Enron Scandal

Topics: Enron, Kenneth Lay, Jeffrey Skilling Pages: 8 (2885 words) Published: August 10, 2013
An Ethical Analysis of the Enron Scandal
The Enron scandal is one that left a deep and ugly scar on the face of modern business. As a result of the scandal, thousands of people lost their jobs, some people lost their entire pensions, and all of the shareholders lost the money that they had invested in the corporation after it went bankrupt. I believe that Kenneth Lay, former Enron CEO, and Jeffrey Skilling behaved in an unethical manner without any form of justification, but the whistleblower, former Enron vice president Sherron Watkins, acted in a way that upheld moral principles.

I can understand Jeffrey Skilling’s motivation, since money and greed are very powerful forces, occasionally driving even the most honest individuals to commit horrible acts. I might understand a destitute individual committing a dishonest act in order to feed themselves or their children, but Jeffrey Skilling was by no means destitute and had no just cause to even consider deceptive accounting. Personally, I am constantly faced with situations where it is possible for me to be dishonest and steal expensive items from the company I work for, but I choose not to since these things are needed by the company and are owned by the shareholders. I believe that I have no right to steal anything since I am living very comfortably, with respect to most humans, and I am satisfied with my economic position. If Jeffrey Skilling had looked at the Enron situation from a perspective similar to mine, he probably would not have seen any reason to do what he did.

Sherron Watkins’s actions, in my opinion, were perfectly orchestrated in a very ethical manner. She noticed something suspicious about the accounting, so she took a closer look and didn’t just ignore the problem. When she realized the depth of the situation, she reported it to the people that could do something about it in the organization, even reaching the top man, Kenneth Lay. When the company refused to correct the situation, she went to the media, which forced the problem to be fixed by causing shareholders to dump their investments in Enron. In her memo written to Kenneth Lay, she expressed concerns that her 8 years with Enron would not be worth anything after the scandal, but she went ahead anyways despite these fears about her future employment.

Sure, people lost their jobs and pensions when the news came out, but that was not the fault of the whistleblower. It was the fault of those who forced her to take the story outside of the company. It was Jeffrey Skilling’s fault in the first place that the unethical accounting was being done, but the company could easily have fixed the problem internally without going bankrupt. If Kenneth Lay had actually done something about the problem, share values might have gone down after the corrected financials came out, but the company would probably have survived. I have seen companies in far worse situations reverse their fortunes by replacing management and making their processes more efficient.

I think that whistle blowing is a very courageous and selfless act, since it exposes the person to economic, personal, and sometimes physical attacks. I am reminded of the story of Jeffrey Wygand, a tobacco company scientist, who blew the whistle by declaring that tobacco company executives knew about the dangers of smoking and considered cigarettes “nicotine delivery devicesâ€, but did not care about the health problems caused by smoking. After blowing the whistle, he was threatened by his company, fired, and followed by unknown people for quite some time afterwards. I have never blown the whistle personally, but I can easily see how dangerous it would be, given the vulnerable situation that it places the person in.

Although I think that Jeffrey Skilling should be given the most blame for the corruption at Enron, that does not mean that Kenneth Lay is not deserving of some blame for what happened. He was the lead figure at the corporation...
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