ENRON

Business Ethics.
My name is John Arra, I will be giving an example of bad business ethics in the corporate
world, and the company that I will be talking about is Enron. Enron was an energy company
based in Houston Texas and had around 21,000 employees in 2001 before it went bankrupt.
After a series of scandals involving deceptive accounting practices bordering on fraud involving
Enron and the accounting firm Arthur Anderson, it stood at the verge of undergoing the largest
bankruptcy in history. The executives who practiced these unethical actions accomplished these
fraudulent practices through Enrons complex financial statements that were confusing to
shareholders and analysts. In addition, its complex business model and unethical practices
required that the company use accounting limitations to misrepresent their earning to indicate
favorable performance. They did this to inflate their profits while keeping their debts off the
books. It was the combination of these unethical actions that later resulted in the bankruptcy of
the company even though it was listed as the seventh largest company in the U.S. who was
expected to dominate its industry. However, it became the largest corporate scandal in history.
As for the consequences for this ordeal, no one got away scot-free.
The company Enron:

Sustained a loss of over $70 billion

Shares dropped from $85 to $0.30

The pension fund for the companys employees was obliterated

o Pretty much they lost their jobs, homes, and retirement funds

ENRON
2

Arthur Anderson, which was one of the big 5 accounting firm in the world, was charged with and
found guilty for shredding thousands of documents that tied them to Enron. Because of this, the
company was put out of business and 85,000 innocent employees lost their job and pension fund.
As for the executive board of Enron, they were faced with criminal actions for using these
unethical business practices.

CEO Ken Lay for example was subject to 45 years in prison and was supposed to
pay more than $90 million from his own pocket for compensation before he died.

Skilling was convicted and was sentenced to 24 years and 4 months in prison.

In summary, bad business decisions and unethical business practices affects many people,
employees, investor, and consumers. So just try not to become like these people and just practice
good business ethics and lead a righteous life.