Essay enrons case - 956 Words

German Jordanian University Business Ethics (316) Lecturer: Mr. Montaser Tawalbeh Case Study Enron: Were They the Crookedest Guys in the Room? Case Summary Enron has become the classic case on business ethics. Enron formed after the merger of Internorth Incorporated and Houston Natural Gas in 1985. On January 1, 1987, as part of the merger agreement, Ken Lay became the new CEO. In 1990, Ken Lay hired Jeffrey Skilling from McKinsey and Company as the Head of Enron Finance. By 1995, Enron had become the largest independent natural gas company in the United States. In 1997, Skilling became president and Chief Operating Officer at Enron. Ken Lay’s goal was for Enron to have the same brand recognition as ATT. Enron’s long†¦show more content†¦Enron was in its strongest financial shape in history. After Skilling resigned, Ken Lay asked employees to write him if they had any concerns. Sherron Watkins sent him a letter with the question â€Å"Was Enron too risky to work for?† Ms. Watkins worked in the Accounting Department and had a number of concerns about CFO Andrew Fastow’s partnerships that related to off balance sheet transactions. Fastow used Special Purpose Entities (SPEs) to move assets and liabilities off the balance sheet. As a result, Limited Liability Partnerships were formed by Fastow to transfer debt and risk â€Å"off line†. The net result was that Enron was able to produce lower debt levels and hide losses in their financial statements. In addition, the deals were financed using Enron stock. On October 16, 2001, Enron reported a $618 million third-quarter loss and disclosed a $1.2 billion reduction in the value of the shareholders stake in the company, partly related to the partnerships run by Fastow. Andy Fastow resigned as CFO on October 24, 2001 after the SEC announced they were going to investigate the financial reporting at Enron. By November 2001, it was disclosed that Enron had potentially hidden billions of dollars in debt and that Enron’s financial statements had not been accurate for years. Ken Lay’s response to the off balance sheet transactions from Fastow was that they were over Lay’s head so thatShow MoreRelatedEnron’s Stakeholder Impact Case Analysis Essay1725 Words   |  7 PagesIntroduction: Widely known as the champion of the energy industry, Enron is suddenly faced with a corporate crisis in the form of a scandal. This scandal involves not only Enron’s accounting practices but also its corporate governance and culture (Lawrence Weber, 2008). This report will recommend some potential strategies for Enron to move forward from the scandal. To do this, we must incorporate stakeholder theory, which â€Å"argues that corporations serve a broad public purpose; to create valueRead MoreEssay on CaseAssignment21409 Words   |  6 Pagesï » ¿ Case Assignment: Enron Case 9 Yesenia Garcia BUSI 472- B07 LUO Introduction In 1985 Ken Lay took over a couple of big name gas pipeline companies that came together and thus the infamous Enron Corporation began. They offered a variety of services that were not limited to natural gas but also included electricity, communications, and many energy related services. Together, CEO Jeffrey Skilling, Chairman Ken Lay, and CFO Andrew Fastow were able to bring transformationRead MoreEnron s Ethics Code Of Enron Essay943 Words   |  4 Pagespensions which literally means they lost their life savings. This article focuses on Enron’s ethics code, Enron’s failure of top leadership, Enron’s corporate culture and Enron’s complicity. On the other hand, I will discuss the lessons I learnt from Enron case. Keywords: Enron’s ethics code, Enron’s failure of top leadership, Enron’s corporate culture, Enron’s complicity, lessons learnt from Enron case Enron’s ethics code Respect, integrity, communication and excellence are the ethics code of EnronRead MoreThe High Turnover Rate Of Leadership1008 Words   |  5 Pages1.2 market trends During 1990s, the reason of the high turnover rate of leadership in Enron was the PRC system and the new â€Å"arrogant culture†, which pose a threat to conservative cautious. In this case Enron was put in a highly uncertain environment. In the late 1990 and 2000, Enron’s traders had great passion on prove themselves. The principle of â€Å"priority of profit† at any costs led to considerable agency problems for shareholders of Enron. 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Students might speculate that some customers that had signed semi-permanent contracts with Enron for the delivery of bound commodities were left while not a reliable supply. d. The full impact of Enron’s collapse on suppliers isn t explored within the case. StudentsRead MoreEnron Was Formed In 1986 By Ken Lay (â€Å"Enron Case Study†,1439 Words   |  6 PagesEnron was formed in 1986 by Ken Lay (â€Å"Enron Case Study†, n.d). It was an energy and service company based in Houston. â€Å"The early years of Enron were modest, and despite suffering financial woes and tremendous debt for several years, Enron survived.† (Rafraf Haug, 2013). Enron was the 7th largest company on the Fortune 500 in the year 2000 with assets of $65 billion and revenue of over $100 billion (â€Å"Enron: Quality Assurance†, 2016, p 17). Despite of revenues in 2000, Enron filed for bankruptcyRead MoreOrganizational Culture : The Smartest Guys Of The Room1649 Words   |  7 Pagesteamwork and ethical behavior and in the end it only plagued Enron until it eventually collapsed under its downfall. The aggressive organizational culture started with Enron’s founder, Ken Lay, and other members of its top management such as Jeffrey Skilling and Lou Pai. From there it trickled down into those who worked under Enron’s top management such as traders and other employees. The aggressive culture then starts in the established criteria for new workers who are meant to fit into the founder’sRead MoreThe Ethical Dilemma Of Enron Essay1404 Words   |  6 Pagesof Houston Natural Gas Co. and InterNorth Co. The Chairman Kenneth Lay, CEO Jeffrey Skilling, and CFO Andrew Fastow were the backbone of Enron during its growth period. These executives exercised their power and expertise to unethically â€Å"increase† Enron’s profits by hiding the company’s debt. The ethical dilemma that Kenneth Lay and Jeffrey Skilling faced was whether to let their stakeholders know how poorly the company was doing, or to hide the debt. They chose to cut corners and falsif y informationRead MoreFraud Examination Enron Paper1140 Words   |  5 Pagesstatement to stay unconsolidated. 2. Analyze the situation - again, take a lessons learned approach. You might use the following questions as guides: A. What important internal controls were ignored when LJM1 was created? LJM1 ignored some of Enron’s entries in the books that were missing. Outsiders owned less than 3% of the Special Purpose Entities equities. There was an error made by Arthur Andersen to let LJM’s financial statement to remain unconsolidated. If the financial statements had been