Conflict Of Ethics In Enron

Business Ethics Submission

Ethics and Enron

Submitted by:

Sandeep Kumar Pal 0317/51 Section-E

Contents

Introduction 3

History of Enron 5

The Story 7

Ethical Issues Enron’s Corporate Governance Conflict of Interest Partner-in-Crime Weakness 10

10

12

13

14

The Result 15

Bibliography 16

Introduction

Enron scandal is perhaps one of the biggest, rather the biggest business scandal to start the 21st century.

Things are bound to go wrong when conflict of interest is there. When an external auditor keeps on auditing a firm for more than 15 years since the firm’s inception and has seen its auditing fee to

But in the case of Enron, Arthur Anderson was auditor of Enron since its inception. It was certifying the financial statements of Enron since beginning. That’s why anything wrong with them meant conflict of interest. Reasons for Conflict of interest:

1. Payment of millions of dollars every year

2. Many former auditors at Arthur and Anderson worked at the highest positions of management in Enron. In short. Arthur Anderson was not only auditing, but also helping in running the company

Many of the employees of Arthur Anderson and many of its partners raised concerns on the way account of Enron was being handled. These people were taken off the charts. Thus, we can say that Arthur Anderson was deeply involved in the scam.

Or we can also say that to hide one wrong thing, they might have kept on repeating the mistakes.

On October 12 2001, David Duncan, the senior partner in Anderson and in-charge of Enron account ordered his staff to shred all the documents related to Enron.

From here, we can say that possibly David is the only or the main culprit from the Anderson’s side.

In pursuit of saving just his false reputation, he ended up not only harming it more, but also harming the small

But, at Enron what I felt was they were not apt to fulfill their responsibilities. They had no control over what the management was doing. They felt satisfied by what management was showing as false profit. Had they been keener on how can a firm since its inception show an YoY growth as well as profits every quarter, I believe the investors had earned money could have been saved. Had they put some check on the firm’s spending on entertainment activities, had they asked for the operational efficacy, the picture might have been different