The excessive ambition of senior officials in the Enron case
There is no doubt that the excessive ambition of the senior Enron officials, ignoring their own ethical regulations, led the company to the disaster. The lack of compassion, honesty and integrity, made one of the greatest frauds in the history of the United States. Bading of the energy market, for own benefits. Enron undermined good faith, of each of those who were touched by fraud. But even more of the clients, shareholders, who were scammed and their employees, who after dedicating a life to the company, were left without jobs and without the retirement plan. Enron does not develop a strategic and control plan to detect this fraud. Possibly an aggressive internal control system is one of the alternatives. With the purpose of detecting and preventing fraud. One of the dilemmas of the Enron company, did not put into practice the ethical values of the organization for its senior managers. Through what happened, it is necessary to raise awareness among low -ranking employees, but also those of senior management. A program of business ethics and monitoring of these. The need for the creation of a healthy work environment, where everyone understands, that is not worth risking, before the legal consequences.
The action taken by the United States Congress was correct, to take a letter of action to avoid, that another case like Enrona seems, given the ambition of some, to deceive shareholders, hiding information, employees, withESMERO AND TESÓN, give everything for the company and that of the clients, for breach of false services and promises. But more can be done, such as reform. In addition, the importance of diversifying the asset, so that it has a good performance and does not be exposed so much to such a volatile market. You also have to be looking for and creating better transparency and dissemination standards in the Audit Profession. It must be recognized that Oxley Sarbanes Law meets that criterion.
A reality is true, the more transparent the financial reports, the greater the credibility the companies will have. The need for a stricter regulation in financial markets arises. Regarding the supervision and regulation of the stock market, they must be more proactive and committed to detect fraud and know all those sophisticated accounting practices that companies can use to hide investor losses and report profits not made. Regulations must be approved to prohibit such practices. Capital market regulators must work in the regulation of credit rating in companies, their competitiveness and credibility of the qualifications published by market. In addiction, pension fund regulations should be reviewed to ensure that investments are placed correctly. As for the investors of the stock market, they must be aware of not blindly follow the market demonstrations. Investors should study companies based on fundamental and technical research and not resort to market rumors and demonstrations. Investors must understand the underlying reasons for the increase and fall in prices, they must monitor the reasons for the change in the price and not simply discard it without thinking. Investors must have a more sagas mind and distrust the bad recommendations and approval by market by participants, credit rating companies and auditors.
Regarding administrative level, the members of the Board of Directors must sufficiently understand the nature and strategy behind the main transactions, including complex commercial structures and are willing to challenge, if such transactions that are beneficial for the company and businesses that felt. The Board of Directors must be aware of the risks linked to the business in making financial decisions and the need for internal control as an instrument of transparency. The Board of Directors must be proactive and diligent to guarantee compliance and question any management that creates suspicion. The directory’s work is to supervise the performance of the company, regarding the integrity of finance, guaranteeing the transparency and dissemination of the company’s financial reports.
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