Ethical Issues In Corporate Governance

INTRODUCTION

“Corporate Governance is defined as a system of processes and rules by which an organization is directed. This involves controlling the interests of shareholders, management, employees, customers and the society.” Corporate Governance delivers benefits through the ethical framework. Corporate Governance is an antidote to corruption and scandal. Corruption consists of acts committed at a high level that distort policies.

Corruption is about the pursuit of profit through appropriate institutions. It is a misapplication of codes of conduct that need to be regulated by different codes and fraud as the breach of

The company was the rising star of the stock market. In the Fortune’s Most Admired survey, Enron was rated as the best innovative large company in America.

The Downfall

The scandal was the biggest bankruptcy in America history. Thousands of employees lost their jobs and retired employees have lost the funds on which they depend. It was seen as a catastrophe to investors and employees when Enron filed for bankruptcy in December 2001. Their shares dropped from $90 to just pennies.

This was the result of many of Enron’s losses that were not reported in the financial statements. The executives faced an ethical dilemma because they knew about the accounts that were hiding losses. The Board

The board is the recipient of the shareholders and people and it is their responsibility that correct decisions are made and that the law is being followed. The board of directors in every company must provide moral leadership, must be honest and responsibilities are taken seriously. They have to request accurate and relevant information. Board membership is a serious

It failed because of its deceptions, it showed poor judgments. Enron failed because of its incompetence and lack of transparency. Could the board prevent the collapse? Yes, if the members taking responsibility seriously and in which integrity matters. President Bush design his plan to improve corporate responsibilities and protect shareholders. Investors have access to information that will allow them to gain a sense of the financial situation.

Key Management

Kenneth Lay was the former Chairman of the Board and Chief Executive Officer for Enron. Prior to Enron’s collapse, he was credited with building Enron’s success. He becoming the focus of the anger employees, shareholders and pension fund holders who lost billions in the scandal.

Skilling joined Enron in 1990, he was President and Chief Operating Officer. He was seen as a key architect of the company’s gas-trading