In the case of who was responsible for the crimes of Enron, former CEO Jeff Skilling is most responsible. The court has charged Skilling with many counts of fraud, making false statements, conspiracy, and a insider statement. Skilling also quit right before Enron collapsed, so he saw Enron going down and all of Enron's secrets would come out once Enron collapsed, why he left. Here is why Skilling is held accountable for the crimes of Enron.
First, Jeff Skilling was charged with 12 counts of securities fraud. Skilling went out and changed the stock of the company to make it look like they were a great company. And he kept on doing that knowing that he was putting 20 million jobs in jeopardy, but also knowing he put his own in jeopardy, but by that time he would be set for generations. Accoring to www.justice.gov/, Skilling only really cared about money, and thought he could get away with this. Anyway it totally backfired on him and he got charged for 12 counts of securities fraud and he lost $60 million, and is now in jail, but that might not be enough for the 20 million people who lost their jobs. Skilling testified against the fraud saying that there was no such fraud. According to the documents, he did commit fraud. Skilling also lied to auditors.
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He told everyone that Enron was doing very good, when in all reality they were billions in debt. He kept on lying, like in court when he was getting charged he lied and said I did no such thing. He did not stop, it was like lying was second nature to him. According to www.sec.gov, he also lied about Enron's stocks, and he was also stealing from the company and he said he didn't steal a nickel. Everyone who was in Enron's top ten of power said that skilling was not lying, and even Skilling said he wasn't. If he wasn’t lying, then why did Enron collapse? Then why did Skilling
His license to practice law was suspended in Arkansas for five years. He was also fined $90,000 for his obviously untrue testimony. After all that happened Hilary still stayed by Bill Clintons
Beam was aware of the fraud when it first began; however, he went along with it in order to avoid being on Scrushy’s bad side as Scrushy was known to get angry and threaten people. Beam knew what he was doing was wrong and his conscious started weighing so heavily upon him and could no longer go along with the charade that he decided to leave the company. Others with knowledge of the fraud could have also helped to stop it by reporting it to the authorities, or reporting the correct numbers on the reports. The fraudulent activities could have been detected earlier if there had been a trend or ratio analysis in place. Beam also confided the wrongdoing to his wife; therefore, she also could have also reported it.
The overall operations of Enron were improper particularly misrepresentation of the financial statements. Most of the directors were involved in the scheme, Andrew Fastow who was one of the directors was influenced and was aware about the company's profits and mainly responsible for establishing the various partnerships such as the JEDI, Chewco, Kopper's & Dodson's, etc. The profits that Enron gained were distributed internally without the Board of Director's consent amongst the executives as well as Jeffrey K. Skillings, the CEO. Enron's transaction were very much questionable to its stakeholders consisting primarily of workers, consumers, taxpayers and the
Throughout the case, it can be seen how Cendant Corporation was performing activities that dealt with the interactions of income smoothing. The main cause of performing with Income Smoothing was to make their shareholders and investors believe that they had a professional and ethical operation running. Income smoothing can best be represented as how either gains or losses from a certain period are taken into a good or bad period with losses or no profits. Income smoothing throughout this case was used as an unethical practice performed by Cendant Corporation to achieve financial stability and falsify numbers to make the investors believe they had premium stocks when in reality it wasn’t what was really occurring which would then lead to the
From the perspective of classical theory, he is punished because it was his rational choice to commit an offence against society. Since it was his rational choice, he deserves to be punished. Yet, insider trading is not a crime for which a mandatory sentencing is envisaged. Here is the weakness of classical model of justice: it does not account for why the judge chose to sentence Mr. Gupta.
history. For decades he ensured investors that they would receive returns between 12-13%, not only an unusually steady rate, but he also assured this rate in in every year, no matter if it was an up or down year. This should have been a big red flag for investors, as no other investment firm was able to match or even come close to such a performance. (Berman & Knight, 2009)But there are a few more choices of Bernard Madoff and his behavior, which should have questioned his credibility. A good example was the choice of a small accountancy firm to audit one of the largest investment firms on the Wall Street.
To believe a 70-year-old industry expert who knew exactly what he was doing was easy. When the economy is doing well then no one complains and therefore regulation isn’t taken seriously, making it easy for Ponzi schemes to exist. Investors such as Steven Spielberg’s charity, billionaire publisher Mort Zuckerman and Nobel peace prizewinner Elie Wiesel’s foundation for humanity are some of the victims (Bernard Madoff $50Bn Ponzi Scheme Scam Scandal, 2008). People thought they were lucky to be able to invest with Madoff because they were promised high returns between 10%-12% (Bernard Madoff $50Bn Ponzi Scheme Scam Scandal,
Bernie Ebbers, the former chief executive officer of WorldCom, was a Charismatic leader according to the characteristics he has demonstrated in his leadership such as strong vision to grow the company into a worldwide telecommunication giant, willingness to take personal risks to achieve that vision and displayed extraordinary behaviors like relentless cost cutting tales (Robbins & Judge, 2015). Ebbers’s being named as “one of Network World’s 25 most powerful people in the telecommunications industry”, the key staff members description of him as a charismatic leader who inspired extraordinary levels of personal loyalty and high employee performance and Murray Waldron, one of Ebbers’s original partners, description of him as “the most focused leader I’d ever seen.” are indicative of his leadership. According to the case, Ebbers violated laws and ethical boundaries to inflate stock price by filing false financial statements, involved in security frauds, accused of falsifying six regulatory filings, offered $80,000 to $300,000 loans to as many as 50 top executives not put in writing.
To further exacerbate the situation, employees that raised concerns over Enron’s management were demoted or fired hence creating a workplace full of distrust and paranoia, with no clear
Kikukawa, who reassumed the CEO position after Woodford was fired, was forced to resign. Had Woodford opted to not do anything, the company would have plunged further into debt. The press would have exposed the anomalies anyway and Woodford could have been condemned as an accomplice to the crime. Principle of Deontology
For Bernie Madoff he was able to use a couple of different factors to continue to bring in more business for his firm. Bernie was a very smart, intelligent man himself and was well liked in the financial community. Madoff had received his Bachelor’s Degree from Hofstra University where he had previously served as a trustee until his scheme was revealed (Troop, 2009). Madoff had been instrumental in the development of the NASDAQ providing him first-hand knowledge of this new market and how it would make things easier, especially for him and his Ponzi scheme (Ferrell, Fraedrich, & Ferrell, 2013). Having served as the NASDAQ Chairman for three years in the early nineties, knowledge of the changes being made to the regulations were virtually placed in his lap and made it much easier for him to keep up this scheme.
It shows how the fraud was detected and the accounting practices that were used at the time, how the director
1. What factors in the WorldCom case support the conclusion that CEO Bernie Ebbers Knew about the financial statement fraud? What factors support his defense that he did not know about the fraud? Bernie Ebbers Knew about the financial statement fraud because he was the one who encourage others to go into financial fraud because of the stock prices were going down, which was affecting his marginal loan. For that reason, he was trying to sell his stock, but the board of Directors lent him $341 million, along with 2% interest rate.
Collapse of Enron The collapse of Enron was due to the unethical moral principles by Enron Executives and the misleading of financial accounts. Most of the reasons for collapse are described below. Misleading of Accounting Entries The one of the major part in company collapsed was the failed investments in other businesses apart from their main business like investments in Internet and Communication business and the use of Special Purpose Entities(SPE) which were backed by Enron stock, were created to keep the debt off from the company’s balance sheets and it also helps to prevent significant losses to appear on financial statements and it helps in support the share price to increase also. But when the stock prices start to decrease; Enron was not successful to back its guarantees and when these doubting accounting practices appear, all the profits which was reported was disappeared and Enron collapsed.
Kenneth Lay, Mr. Jeffrey Skilling and the company CFO, Mr. Andrew Fastow .The management level of Enron Corporation had misconduct the code of ethics and fail to performing the duties of a corporation which is telling the truth of the situation of a corporation .Instead , they tried try to hide the truth of their financial status and create a false prosperity situation and make the public believe on them in order to support their shares prices . The misconduct of code of ethics by the management level by Enron corporation has led to the another question – The ultimate responsibility of a corporation towards society ? The ultimate responsibility of a corporation is to gain profit or become a stable economic unit ?