Business Ethics Case

Structure:
Company profile The ethical point of view The guilty parties Main ingredients of the downfall Closing thought

Enron Company Profile

Enron Corporation was an American energy company based in Houston, Texas. Enron employed around 21,000 people and was one of t e world!s leading electricity, natural gas, pulp and paper, and communications companies, wit claimed re"enues of #111 billion in 2000. $ortune named Enron %America!s &ost 'nno"ati"e Company% for ( consecuti"e years. 't was formed in 1)*+ w en Houston ,atural -as merged wit 'nter,ort . After se"eral years of international and domestic expansion in"ol"ing complicated deals and contracts, Enron was billions of dollars into debt. All of t is debt was concealed from s are olders t roug partners ips wit ot er companies, fraudulent accounting, and illegal loans.

Ethical Point Of View

The Guilty Parties

These include !en "ay# $eff %&illing# and 'ndrew (astow Believe Enron was great for economy Circulated money# provided )o*s# dealt with international companies +id not inform pu*lic in order to &eep Enron in *usiness

The Guilty Parties

!enneth "ee "ay
Born 'pril 1 # 1-.2 +ied $uly # 2//, 0age1,.2 Charge0s23 (raud# false statement 4 Penalty3 Could have faced ./ years in prison plus monetary fines# *ut died *efore sentencing
,

The Guilty Parties

$effrey %&illing Born 6ovem*er 2 # 1- 7101- 781182 2 Charge0s23 conspiracy# securities fraud# false statement# insider trading Penalty3 originally sentenced to 2. years and . months and fined 9. million :%+# pending resentencing
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The Guilty Parties

'ndrew %tuart (astow Born3 +ecem*er 22# 1-,11 Charge0s23 conspiracy# securities fraud# false statement# insider trading Penalty3 , years# followed *y 2 years of pro*ation %tatus3 <ncarcerated
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The =uilty Parties

'rthur 'ndersen was one of the world>s five leading accounting firms 0Big (ive2 ?as paid 9 2m in 2///# the ma)ority for non8audit related consulting services@ Type3 "imited "ia*ility Partnership (ounded3 1-17 <ndustry3 'ccounting# Professional %ervices#TaA# Consulting4 "icenses of Certified Pu*lic 'ccountants surrendered in

Arthur A n Housto dersens n branc h

g oyin r t s ne de aid s routi s wa firm The ments u doc

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The main ingredients for the downfall of

DEREG !"T#O$ B government decision to let gas prices float with the currents of the mar&et %"R&'TO'%"R&ET B accounting practice that allowed Enron to *oo& potential future profits on the very day a deal was signed
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The main ingredients for the downfall of

SPE(#"! P RPOSE E$T#T#ES 8
is a legal entity 0usually a limited company of some type or# sometimes# a limited partnership2 created to fulfill narrow# specific or temporary o*)ectives@ %PECs are typically used *y companies to isolate the firm from financial ris&@ ' company will transfer assets to the %PE for management or use the %PE to finance a large pro)ect there*y achieving a narrow set of goals without putting the entire firm at ris&@

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(losing thought) E*ery fraud could ha*e +een ,re*ented if honest ,eo,le had as-ed the right .uestions at the right time

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