Ranie B.

Monteclaro
A31
AUD 312 – Governance, Business Ethics, Risk Management & Internal
Control

1. What is your reflection on the video? (5points)

An alcohol dealer remarked: “I supply intoxicating drinks to
whites and blacks, nationals and foreigners, young and old, literate
and illiterate. Yes, all of them look different but to me all money
looks the same”, this mindset of an alcohol dealer is the mindset I
can see to the Corporate officers of Enron Company. Enron was too big
to fail at that time. It was considered as one of the most admired
companies during the time of their reign. However, if you will look
past the image that they project to the stock market and the public,
one will see the height of corporate greed and intolerable culture of
competitiveness. People at the top encouraged the culture of getting
things done despite questionable means of achieving them. Top
leadership tolerate unscrupulous traders as long that they make money
for the company. With unrealistic targets and neck-to-neck type
of performance evaluation wherein bottom raters are kicked out of the
company, the system bred arrogant and highly competitive players
willing to take in unbelievable risks to the company in hope of
reaping the highest possible returns. The lesson therefore is that
intelligence can take you only so far, but without paying attention
to doing the right things, there would be dire consequences. At the
end of the day, the case should be a wake-up call to the investors,
bankers and public that they should pay attention to the type of
people running the company that they have stakes in. We should look
past the numbers and understand how do these companies really make
money and how their top leadership behave.

2. Based on your initial understanding of corporate governance, what

do you think were the governance issues/ bad practices that was shown
in the documentary? Cite atleast 3 issues and explain briefly. (5
points each)
Faithful Representation and Transparency of Financial Reports

Using the mark-to-market accounting, future receivable from

signed deals were recognized regardless whether cash was already
received or whether the deal would prosper in the long haul or would
just go puff. By this, the company able to their financial report look
so attractively good. There is also an instance that Jeffrey Skilling
refuses to answer one of the questions of the reporter at fortune
interview because he says that he is not the accountant, instead he
sent financial personnel including Andy Fostow. After how many hours
of finding the documents Fostow says to the reporter that “I don’t
care what you write about the company just don’t make us look bad”.

Intimacy

As what the video presented, Jeffrey Skilling the CEO of Enron

Company has a good relationship with the U.S President George W. Bush.
The President does not take any action instead He allows the Company
to own California and started to control the electric power in order
to increase the bills of its consumers.

Abusive use of Power

As I have said earlier, Top leadership tolerate unscrupulous

traders as long that they make money for the company. With unrealistic
targets and neck-to-neck type of performance evaluation wherein bottom
raters are kicked out of the company, the system bred arrogant and
highly competitive players willing to take in unbelievable risks to
the company in hope of reaping the highest possible returns. The
company fired 10% of the employees who grades the company 5.