ENRON CASE, The public scandal caused by senior executives
The Enron case was a public scandal due to the financial disorder caused by the senior executives of the Company. Because they used a business method in which the price of value in the assets accounted for it for the appraisal in the market at the time of the closures of the accounting cycle. This accounting method was managed by one of the administrators so that the facts were not or were about to be carried out, but they were not specifying. That is, they used financial data such as income that had not been occurred and these unreal entries were part of the profitability, performance or utility of Compinance. On the other hand, all these transactions were made under the observation of the audit company. Therefore, before everything came to public light, Companía won a position within the list of the best companies and won certain awards, but because it was climbing position I caught attention to a journalist who opened the box ofPandora who hid the senior executives of Compia. From this moment the company begins to be investigated even together with the companance that audit it. In this way, both companies begin to the trial to determine that it really happened so that Companía would reach bankruptcy. Therefore, we must investigate and analyze the processes or strategies that led the company to end in this way. In order to be able to know more thoroughly the Enron case we must ask the following questions: Did the company provide an appropriate frame of reference to achieve consistency in actions and decisions? Ethics and policy of the company Enron, how were they?
Enron is an energy companance that had location in Houston, Texas, was constituted for 1985 due to the merger between Houston Natural Gas and Inter North companies. Its president was Mr. Kenneth Lay. This company was dedicated to the administration of gas pipelines within the United States and then expanding its businesses as an agent or negotiator of future hiring that were derived from natural gas and its development, building and/or operating gas pipelines and energy plants by several countries of the countries of theworld. Being an innovative company was awarded by Fortune magazine for five consecutive years (1996-2000). In addition, he was like a fascinating, charming and surprised company for the emphasis of his assembly launched among executives. This company puts aside its ethical values and is challenged to compete in a culture where it is promoted to feed the money through the ambition and aggressiveness promoted by executives, such as Skilling. His procedures in the company were due to marketing energy, in which they could obtain their own plant after the electricity industry was privatized. The growth of the company was due to the fact that its activities to market energy with almost total control in the world since they provided global services since they sold the gas as if they were necessary daily as: meat or grains, among others. In addition, the growth on the creation of a mega virtual global warehouse and marketing online energy influenced large investors to want to be part of this great company to have pension funds throughout the United States. This waste company in the stock exchange The savings of its employees for their retirement using in an inefficient way since the balances they provided were not the real ones. Everything is because they quoted a bag of values 90 dollars when their values were really decaying with a value of just one dollar. Also, they carried out financing operations of new expansion investments which allowed them a feasible path to maneuver on prices in the production of energy at the regional level in this way they created fraudulent companies for executives to satisfy their own interests and needs. Giving this deception then carried out operations between subsidiaries of the companies to be able to hide and strongly disguise their losses and continue to obtain financing that were not registered in the accounting data as debt. Also, its failures such as the “Dabhol” Project of Power Plant in India in which it spent a billion dollars, the management of water supply services in England and Argentina (Azurix) that cost him two million dollars, soAs its association with “blockbuster” to be its “backffice” support but as its technology was lousy, the treatment quickly broke.
In this way, the company violates all ethical responsibilities that must be assumed in a company or as a person. Greed and the desire to have more money led all these executives to violate professional ethics by putting their first personal interest. All the factors that promoted to abuse how competitiveness or pride led all companies and people involved to falsify or dodge the system taking all the dreams and illusions of many other people. In addition, the lack of inspection drags them to lose the business perspective and work under a false lucrative abuse. Professional ethics must be in full so that a company can achieve its business success, but enrones personal benefit since labor relations went beyond these. Accounting data were manipulated as expenses and income were transferred to other affiliated companies. The way to handle the future hypothetical value system since they counted benefits with good potential for the future when they were going to close a transaction or business with prices expectations. Executives used all their tactics to raise the price in the actions since they could obtain better benefits in the stock exchange since they provided privileged information and could increase or withdraw actions. On the other hand, they cheated the investors that the actions had a greater value than they really had and the employees so that their pension funds invest it not allowing them to withdraw them when they began to decrease since one of the clauses was not being able to accessto them in four years. These people took advantage of the naivety of their employees because when everything went to light their actions were worth nothing. Also, they bribed the government to give them the gas supplies contracts from other countries, bribed financial analysts and used their high level of prestige to dismiss those who asked for actions (Merrill Lynch analyst). Then, they made intentional blackouts to increase the price of electricity. Because they violated many basic principles of professional ethics such as integrity, objectivity, responsibility, confidentiality, honesty or respect among colleagues, Enron was a company that, for missing all these values and acting dishonestly, took their own company to thebankruptcy.
The company when it began to carry out its commercial strategies that allows them to grow and cover other sectors of the market is that their greed of achieving an unbridled power begins by losing control to continue positioning themselves not measuring their limits, their power, socio-economic levelAnd forgetting what its main objective was. These managers did not know how to handle the problems that were arising from the competition and
they involved in fraudulent affairs which ended the success they were achieving. Also, the principles were scarce in the company, after all, the only thing that mattered was money, people affected by fraud were not important, nor their same employees who would become clients. Therefore, the company took advantage of the legal and financial gaps to make up the financial records and benefits of Enron to make it more attractive and attract true income. Enron became obsessed with developing their "public relations policy" in which they merchant that they were the new innovation for how much advertising medium in order to attract new clients who wanted to invest and acquire important capitalist partners such as banks to those who caught or attracted them with thepromise that business would be done in the future and in return they gave them wide financial loans. The causes and effects that influenced Enron’s fall were by the shares quoted in the stock market which were their most attractive asset in the company, but, dueThey could imagine. In this way, in their quarterly balances their losses began and the vicious circle feedback that the contributions were lower since the whim in accounting I can not encourage a promotion and brings the decline of Enron.
conclusion
Enron’s case demonstrates that when a company is directed, ethical aspects must be taken into consideration since they demonstrate how complete the company is the company. In addition, sometimes the vision of executives can lead to nefarious consequences for the company if you do not have a balance and get carried away by greed and the desire to have more money unfairly using the loyalty of investors or employees. Enron did not have any ethical diplomacy only acted in a vile way for the personal good of each of the executives taking the one to anyone and as it was. Since because the human being is inherent in the norms imposed by society because the reasoning on many occasions tells us how we should act and there is no regulation that is analyzing us whether we do it right or not;Since we are going from the line and forgetting our moral and ethical values forgetting what is good and bad, so the company Enron forgot all this instead of being examples for all employees and society. This case must be made aware of and as others: Parmalat in Italy, Aol Time Warner, Worldcom, among others that made fraud to obtain benefit.
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