Ethics in Business: Enron Scandal

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John Roach 2/18/08 Business 101 Ethical Issues in Business It is usually in a company’s philosophy to determine the best interests for the company, its workers, and most importantly, their shareholders. In my essay, I will mainly focus on a certain case where a business has practiced bad ethics, and even immoral responsibility. I will be discussing the Enron scandal. Many people have heard about the Enron scandal that was revealed in late 2001. Enron mainly dealt in the energy business, eventually becoming one of the world’s leading energy and communication companies with claimed revenues of $111 billion in 2000. At the end of 2001, their financial condition was reported to be sustained mostly by systematic and creatively planned accounting fraud, eventually causing the dissolution of the Arthur Andersen accounting firm. This scandal was mainly attributed to Enron creating offshore entities which were not subject to business taxes that raised the profitability of their business. The corporate officers led the deception and created the illusion that they were raking in revenues of billions of dollars when in reality, it was losses. Executives and insiders knew about these offshore accounts that were mainly used to hide losses with the investors completely left in the dark. As a result their stock price was driven up. In their fallout, company executives began to liquidate their assets, trading millions of dollars worth of Enron stock. As the scandal unraveled, shares in Enron dropped from $90.00 to merely just pennies. The liquidity of most of Enron’s assets was apparent when the company reported its third-quarter results on October 17, 2001 as negative due to one-time charges of over $1 billion. It was claimed by management that the losses were mainly attributed to investment losses and $180 million spent in restructuring the company’s troubled

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