Professional Documents
Culture Documents
Team Members
Abdul Wahid Ibrahim
Raman Narayanan
Suzilawati Norsalizan
Ismarizal Ismayatim
Ismuni Latip
Master of Business Administration
College of Business,
Universiti Utara Malaysia
Sun Proprietary/Confidential: Internal Use Only
Questions
• Literature Review
• Introduction
• Enron Findings
• Implications
• Lesson Learnt
No Mutual
monopoly consent
Strict on
Free
weight &
market
measures
No
hoarding
Both the $896 and $976 millions earnings for the year 2000
are after a $326 million charge to reflect the decrease in the
value of the Azurix investment. In addition, there is a $39
million gain on The New Power Company (TNPC) stock.
• CalPERS: paid $175 million & received $171 million -> lost
about $11 million
• Alerted by advisers – resolve to improve accounting &
auditing standards among companies it invests
Sun Proprietary/Confidential: Internal Use Only
Conflict of Interest
• Arthur Andersen LLP
> External & internal audits for years
> Kept permanent assignment at Enron’s office
> Internal accountants, CFOs and Controllers – former AA
> Dismissed as auditor on Jan 2002 – document
destruction & lack of guidance on accounting policy
> Admitted to destroy thousands of documents & electronic
files related according to the ‘firms policy’, before the
SEC issued a subpoena to them
> As at now, not formally dissolved nor bankrupt – ceded
to 4 limited liability corp named Omega Management I
through IV
Sun Proprietary/Confidential: Internal Use Only
Conflict of Interest..
• Stock Transaction & 401(k) Plans:
> Cancellation of Video on Demand (Blockbuster) – shares
dropped to mid $60s. -> senior management started to
sell stock in bull market -> collect hundreds of million
dollar
> Skiling resigned -> ‘personal reasons’ -> shares
continued slide up to below $30.
> 21aug2001, Lay sent email to Enron employees –
optimism to Enron & stock price; and again in
26Sept2001.
> October 17, announced it had changed it plan
administrators for 401(k) plan ->locking their investment
in 30days & preventing workers to sell their shares.
Sun Proprietary/Confidential: Internal Use Only
Implications
1. Social Response
a. External Response – Laws and regulations;
Laws and rules are constraints on bad choices not formulas for good choices;
Tend to be reactive – cannot anticipate new circumstances and unexpected
challenge;
Must achieve a difficult balance which sharply constrain a set of bad behaviour;
3. Commitment to service;
stand for something in a public context, to make a public promise to the community;
commit themselves publicly to use their special knowledge to serve other
4. Autonomy in Decision-Making
the value of professional s to a community lies precisely in their ability to devise successful
plans for new situation;
3. The arrogance of corporate executives who claim they are the best
and the brightest, "the most innovative," and who present
themselves as superstars should be a "red flag" for investors,
directors and the public.
• A company or an organization is
deemed to be operating morally if it
operates within the law.