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Kenneth Lay

Kenneth Lay

Flora Whitney

Grand Canyon University

Management 301

August 8, 2009
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The dollar, which had been backed by the Gold standard long ago, is now valued

by the “people’s” faith in our market system. The Stock market is driven totally by the

faith of its investors in the stocks they buy. When that faith turns to doubt, it is normal to

back off from investing.

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Kenneth Lay, was a Preacher’s son from Missouri, who formed Enron through the

merger of two Texan gas pipeline companies and transformed it into an energy trader, in

the United States and globally. He became the “pillar” of faith that people valued enough

to invest in. In this context, he was an important contributor to the Enron Code of Ethics.

So, when he wrote in this document that: “Enron’s reputation finally depends on its

people, on you and me. Let’s keep that reputation high”. (Lay, Kenneth, Enron Code of

Ethics, 2000, p.3), Enron established itself as the 7th largest company in the United

States, one must question how could such a pillar of faith fall so far from its stature?

The Enron collapse is the biggest scandal in the history of US capitalism. Exposed

are the systemic lying, cheating and theft at the heart of the 1990s bubble economy. Not

just a corporate failure, Enron is a symptom of the structural rottenness of capitalism.

When Kenneth Lay hired Jeffery Skilling to expand their market base, he led

them into the world of technology, entertainment among many other markets. These

books were kept separately from the main company’s portfolio. Only the profits were

reported to the Shareholders, not the losses these investments lost. The profits inflated

the value of Enron’s stock and they made a conscience decision to hide this fact from the
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securities exchange. When the investigation of their books began, Enron used its

employee’s retirement account to bail them out and Lay knowingly offered bogus stocks

for trade.

What brought down Enron was not a lack of management; it was a lack of Ethics.

Certainly the founder of Enron was familiar with the Golden Rule: “Thou Shall Not

steal”. What brought our Stock Market to its current state is a shake in public confidence

in the nation’s securities markets.

George Bush enacted the Sarbanes- Oxley act, which has become the watchdog of

corporate fraud, has improved investor confidence, but it has also damaged the

confidence of small companies to register with the stock exchange in the United States.

The average investor, who had been counting on retirement from their investment, will

have to look elsewhere; its value has been reduced as much as 50%. Most of the people I

know have rearranged their retirement plan from investing in CDs, to taking their money

out of those funds and investing in tangible items, from antiques, collectible automobiles

and income property. Jobless rates are around 10% nationwide and Baby Boomers are

turning 50 at the rate of 10,000 a day.

Part of what makes a company successful is the vision of its leader. They trusted

Kenneth Lay. Sure, there are risks in investing your money in anything, but when you

invest it in an established company who has a leader who is competitive and visionary;

you expect it to be a win-win situation. From the visionary leader of Enron to a common
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cheater, the fall of Kenneth Lay is the epitome of the spirit of greed’s insidious creeping

into a stronghold of virtue.

I was a banquet bartender for 8 years and witnessed this act first-hand. I had a

cash box under the bar which was not highly visible; a young woman leaned over and

attempted to grab money out of it while I was turned around. She was highly apologetic

and I did not make a big deal out of it because of the event. What struck me was that we

all see temptations around us and most of us imagine taking advantage of them. It takes

guts to actually follow through with that kind of action and turns a seemingly ethical

person into a common thief. I believe that Kenneth Lay took that step over the edge from

normal competitiveness to a common liar. He could not face that fact that his company

was losing money and he lied about its value to his stakeholders.

He certainly is not the first or the last liar on earth if the repercussions of his

actions had not affected our stock market and economy so dramatically.

Assignment Week 1: Individual: Ethics and Corporate Responsibility (ENRON)

1) This assignment is due by the end of Week Two.
2) Submit a 750-word analysis in APA format, examining Enron’s 2000 Annual Report.
3) Examine the sections on ethics and corporate responsibility and of the organization’s policies and the applicable theories
and concepts from the text.
4) Go to the ENRON Annual Report link listed above to view this report.

Grade: 9 Grading Criteria: 10 possible points

Content = 1.5 points (possible 2)
 Student accomplished the objectives of the assignment (see above) Your assessment
would be strengthened by including collaboration from others in the field and practical
application of theories from the text and supplemental materials. Always cite in your
college papers (author, year) as you write.

 Student clearly demonstrates understanding of the subject matter at appropriate depth

 Ideas and information presented are adequate; data is not limited or missing
 Paper is clear, focused, and interesting
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 Paper includes relevant material and conveys more than a general message
 Adequate support is provided for assertions Be sure to give sources offering
substance. Expand your discussion what other experts in the field say (references).
 The ability to link theory to practical experience is evident

Organization = 2 points
 The introduction provides a sufficient background on the topic and previews major
points Creates interest
 Central theme/purpose is immediately clear
 Structure is clear, logical, and easy to follow
 Subsequent sections develop/support the central theme
 Conclusion/recommendations follow logically from the body of the paper Your
conclusion draws from the points made in the paper.

Format and References = 1.5 points (possible 2)

 Paper is neat/shows attention to detail Word count: (good)
 Paper conforms to APA standards for format and citation of sources. Needs
improvement
 Citations/reference page follow guidelines
 Properly cites ideas/info from other sources be sure to give credit to your sources; you
would at least cite the text.
 Paper is laid out effectively--uses, heading and other reader-friendly tools Good use of
headings (or subheadings) to guide the reader through the main points of your paper.

Grammar/Punctuation/Spelling = 2 points
 Rules of grammar, usage, punctuation are followed
 Spelling is correct
 Paper has been carefully edited

Readability/Style = 2 points
 The tone is appropriate to the audience, content, and assignment
 Sentences are complete, clear, and concise
 Sentences are well-constructed with consistently strong, varied structure
 Transitions between sentences/paragraphs/sections help maintain the flow of thought
 Words used are precise and unambiguous
Comments: Your writing style is good. The assessment would draw more strength
through collaboration (in-text citations) and bridging theory from the text; I would
encourage more collaboration (references) from experts in the field. Always include a
reference page.Otherwise, this paper was well executed.
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