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Ethics in the Workplace

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Ethics in the Workplace

System of Inquiry

Dwight Whorton

SOC 120

Tracy Green

March 26, 2012

Ethics in the Workplace

In the recent ethical failures in organizations in America exposed lack of culture and ethical values that lead to the collapse of many companies. Enron is a prime example of a highly publicized company that is dissolving due to this ethical predicament. Each executive made decisions and judgments based on their personal outcomes rather than what was in the best, ethical interest of the corporation as a whole. Was the appearance of the ethical values referred to in Enron's code of ethics only skin deep? Identifying the key problems and issues with Enron's organization, analyze and evaluate alternatives, are going to review and discussed in this paper. The evaluation of the case with recommendations will also be review and covered.

"The Enron story has produced many victims. Enron's core values of respect, integrity, communication, and excellence, stand in satirical contrast to allegations now being made public. Enron is now in bankruptcy and struggling to survive. Hundreds of the employees and stockholders have lost their life's savings and are struggling to survive. All of this is the result of unethical business practices conducted by a few of the top executives of the corporation. (Maniam B., Teetz H. )"

How did Enron become the world's largest corporate bankruptcy?

A culture of greediness and deception which was mixed with an accounting department waiting for just such of an opportunity were the right ingredients. But everyone needs to understand how this industry works. Enron was at the top of its field and let everyone know it. The beginnings of Enron's market value had all the right ingredients of a classic pyramid scheme. With this kind of recipe the end result will be if you say you are producing enough capitol, you can get away without proof of doing so because all of your investors will want in. Aside from that Enron paid off its regulators with the money it did have to stop them asking about the money it didn't. Finally, when all this was exposed, the firm was worthless, even though there had been at least some successful businesses within it. This was because, like all businesses, Enron has sold confidence and now this commodity was in very short supply. Chief Executive Jeff Skilling claimed that it was a just extending capitol from the bank and nothing more. This wasn't exactly a whole truth, because given that the real money that Enron did make was earned through deliberately operating with very low reserves.

The questions at hand are: what were Enron's real profits and losses? And who knew what and when? Most likely these are impossible questions to answer, but the take away from this situation is about a company where upper management did not want to know what was going on, and it was everyone's job to keep leaders satisfied and content. Then, if you were able to pull that off, management wouldn't ask how you did it. Or they wouldn't ask how you were lining your pockets in the process. Therefore everyone was getting rich and was happy and didn't care about circumstances surrounding them. Then the money ran out and the walls began crashing down. The irony is that this company that tried and failed to buck the markets was itself the high priest of market capitalism.

When concerning the real profits and losses at Enron, top leaders were unaware of what was happening. Even as Enron's top executives were insisting that the company did not engage in speculative trading, Enron was reaping the bulk of its profits during the California energy crisis by betting on the direction of gas and electricity prices, according to company records and interviews with former Enron traders and executives. Enron made the hugely profitable bets which included one that resulted in a $485 million gain on a single day in December 2000. During this time when federal and state investigators say the company was conspiring with other energy trading companies to manipulate power and natural gas prices in Europe.

Enron's standing as the nation's biggest energy trader may have bolstered its ability to profit on bets on the direction of prices. While it is unclear whether Enron could singlehandedly move markets with its trades, several Enron trading officials said that to justify their risky decisions, they told the company's executives and directors that Enron had a distinct advantage' in the energy markets.

When concerning the question of who knew what and when, top officials Ken Lay and Jeff Skilling said they always relied on the lawyers and accountants who signed off on Enron's earnings statements. Jurors said they should have relied on the truth.

In a decisive conclusion to an epic trial a federal jury convicted the two men of lying to investors five years ago about the financial health of Enron, the company they both led as CEOs.

By convicting the pair of conspiracy to commit securities fraud and related crimes, the 12 jurors rejected Lay and Skilling's primary defense: that they believed Enron's earnings statements were fair and accurate because those statements had been blessed by internal accountants and lawyers.

Instead, the jury agreed overwhelmingly with government prosecutors, who argued that the men used their power to bully and cajole subordinates into painting an artificially positive picture of Enron's earnings for investors. The defense was built around a reliance on auditors, attorneys and staff, and trying to get people to believe that as CEOs, they knew absolutely nothing about fraud when they were getting paid millions.

The guilty verdict in the biggest criminal case to emerge from the wave of corporate frauds that rattled investors from 2001 through 2003 is a significant triumph for the Enron Task Force. That team, formed in January 2002 to investigate wrongdoing after Enron's sudden collapse, has secured 16 guilty pleas from former Enron employees but has failed to win convictions of several prominent former executives. It is also a significant victory for the Justice Department's push to restore integrity to the corporate boardroom. Last year, a federal jury in Manhattan convicted former WorldCom CEO Bernie Ebbers of encouraging his subordinates to cook his company's books. The year before,



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