“United States vs. Enron” Enron Corporation was one of the largest global energy, services and commodities company. Before it was filed bankruptcy under chapter 11, it sold natural gas and electricity, delivered energy and other commodities such as bandwidth internet connection, and provided risk management and financial services to the clients around the world. Enron was established in 1930 as Northern Natural Gas Company and joined with three other companies to undertake this industry.
The four companies eventually began to break apart between 1941 and 1947 as a result of a public stock offering. In 1979, Northern Natural Gas was placed under new management when it was bought by InterNorth Inc. In 1985, Kenneth Lay, CEO of Houston Natural Gas Company devised a transaction for InterNorth to purchase Houston Natural Gas. Lay was named CEO of the new company and changed InterNorth’s name to Enron Corporation.
This newly developed company originally was involved in distributing gas and electricity throughout the United States, and operation of power plants and pipelines worldwide. In fifteen short years Enron became the nation’s seventh largest company, but the company’s growth was due to several illegal activities. During 2001, Enron shares fell from eighty-five dollars to thirty cents. The devastating results occurred after it was revealed that many of its profits and revenue were the result of deals with special purpose entities.
Businesses and people care about ethics in the society, therefore being socially responsible, ethical, and a good corporate citizen, is important to meet and exceed the expectations of any organization’s stakeholders. Today’s organizations recognize the importance of developing and sustaining a reputation that is built on doing the right things and doing things right as viewed by their key stakeholders, as has been the case with Enron. The issues surrounding business ethics, corporate social responsibility, and stakeholder management are treated at diverse points in this work.
Special treatment is given to associated organizational missteps at Enron to increase insight into why such social irresponsible and unethical behavior occurs. This work suggests that organizations like Enron take ethical falls because of failed leadership, an unethically oriented culture, socially irresponsible behavior and operational activities that lead to unethical employee practices. Enron, one of the seven largest American corporations, is about to earn the uncertain division of being the largest bankruptcy in business history.
Despite the formation of Enron in 1985 from the union of Houston Natural Gas and Omaha-based InterNorth, it’s true culture did not actually emerge until 1988, when it went from a “stodgy but safe gas pipeline company” to the “World’s Leading Company, ” capitalizing on the deregulation of both gas and energy and pioneering the swapping of natural gas (CNN. com). The new culture at Enron, headed by founder Lay, started out as a culture of challenge and confrontation. When Skilling and Fastow joined the company in 1990, the culture quickly evolved into one of arrogance, aggressiveness, greed, cockiness, secretiveness, and ruthlessness.
Enron’s corporate culture best demonstrated values of risk taking, aggressive growth and entrepreneurial creativity. Questionable accounting methods and techniques provided Enron with possibility to be listed as seventh largest United States Company and were expected to dominate the market which the company virtually invented in the communications, weather and power securities. But instead the corporation became the largest corporate failure in the world. These unethical actions Enron took part in even had support by auditor, Arthur Anderson, and attorneys, Vinson & Elkin.
The top leaders of Enron had a passion for capitalism, which drove the company to illegal and unethical behaviors, eventually leading to the catastrophic fall of the company. When Jeffrey Skilling was hired, he developed a staff of executives that, through the use of accounting loopholes, special purpose entities, and poor financial reporting they were able to hide billions in debt from failed deals and projects. Both Jeffrey and Keneth went through a very long 17 week trial. On the first week U. S.
District Judge Sim Lake instructed the jury of eight women and four men not to talk about the case during their service, and not to read, watch or listen to news reports covering the trial. Lake told the jurors he did not expect them to “blot out” what they had already heard, but to decide based on evidence. Skilling’s head lawyer, Daniel Petrocelli had said his client did not take part in a conspiracy, and that when he resigned in 2001 for personal reasons he believed the company was in sound financial position.
The defense argued that many of the former executives who had entered plea agreements were not necessarily guilty of breaking the law and were coerced into plea agreements to avoid the cost of fighting the government. Jeffrey Skilling and Kenneth Lay were closely involved in company operations and sought to boost Enron’s stock price to impress Wall Street. Koenig testified that in July 2000, the quarterly earnings were raised from 32 cents per share to 34 cents per share in order to beat Wall Street estimates by 2 cents.
He did not say Skilling or Lay ordered a fraudulent charge. He said he discussed the change with then-president Skilling, who approved changes to financial figures. Koenig was then also found guilty for aiding and abetting securities fraud. In the fifth week of trial with what may been on of the strongest testimony yet, David W. Delainey, former head of the Energy Services unit at Enron, testified that in 2001 then-CEO Jeffrey Skilling signed off on an improper accounting move that shifted Energy Services losses to the wholesale division.
Delainey said that he initially resisted the idea because he knew it was improper, but succumbed to pressure from top executives — including Skilling and the then-chief accounting officer Richard Causey — to go along with the plan. Delainey also testified that Skilling was aware of the use of Raptor accounting vehicles to remove millions of dollars of debt from Enron’s books. The conclusions on the 17th week of trial former Enron CEO Jeffrey Skilling at 52 was convicted of 19 charges of fraud, conspiracy, and insider trading. Kenneth Lay at age 63 was convicted of six counts of conspiracy and fraud.