Essay on Greed and Fallout

Submitted By pnda7777
Words: 1156
Pages: 5

Greed and the fallout

The reason for the fall of Enron can be summed up in one word, greed. Ken Lay, the CEO of Enron, was portrayed as socially responsible. He was very generous with the company’s money as well as his own personal funds. Ken Lay would contribute these funds to certain charitable events in his local community of Houston. I think Ken Lay was just showing to the media and to the Houston community that he has a good socially responsible person, when in fact he knew he was just the opposite. I think Ken Lay knew what he was doing at Enron for all these years were a bad thing to do. All the insider trading, shredding of documents and showing continued profits when there wasn’t any weighed on his conscious. For Ken Lay to deal with knowingly wrong doings of Enron, he donated some of his unethical earnings as CEO to try to tell himself that he in fact was a good person, even though, deep down he knew he wasn’t. SO for that reason, I do not believe that his charitable donations should have been considered in his sentencing at all. I think those donations were all just a big band aid of sorts, to try and heel Ken Lay’s moral boo boo. It’s too bad he didn’t live for his sentencing, because I would have liked to see what would have come of that.
Some of Enron’s primary stakeholders included the employees of Enron and their families. Enron’s bankruptcy caused all those employees’s to lose their jobs. Not only did they lose their jobs, but also their life savings in some cases. Enron’s directors did nothing to protect its employee’s or investors from this downfall. Another primary stakeholder was Enron’s business partners like Arthur Anderson and Vinson &Elkins. These partners where affected in a negative way as well. Arthur Anderson was linked with Enron, as far as their shady, unethical acts. A lot of Enron’s business partners, got a bad name in this scandal, just like Enron did. Another primary stakeholder who was affected by Enron’s bankruptcy was its shareholders. Shareholders who purchased Enron stock between Sept. 9, 1997 and Dec. 2, 2001, the day the company went bankrupt, did receive a settlement of $7.2 billion. The bulk of the settlements, $6.6 billion, came from JP Morgan Chase and Citigroup. Enron’s secondary stakeholders include some of the regulatory authorities. Those regulatory authorities include the Securities Exchange Commission (SEC), Federal Energy Regulatory Commission (FERC), and the Commodity Futures Trading Commission(CFTC). Those secondary stakeholders were affected by Enron’s bankruptcy, because they had to do full in depth investigations into Enron’s dealings. Another secondary stakeholder was local, state and federal government. Even Enron’s chief competitor Dynergy, is considered a secondary stakeholder. In the year 2000, Dynegy was on the verge of taking over Enron before backing out of the deal at the last minute due to Enron’s massive accounting fraud and write offs. Dynegy was then awarded Enron’s crown jewel--Northern Natural Gas Company pipeline—after Enron’s bankruptcy.
Arthur Anderson was the big accounting firm that was responsible for Enron’s audits. Andersen received $25 million for audit and $27 million for non-audit services from Enron. Arthur Anderson did break the law. One of Enron’s lawyers sent a memo, directing workers of Arthur Anderson to destroy all audit material related to Enron. And that's what they did, over a period of several weeks. Supervisors at Arthur Andersen repeatedly reminded their employees of the document-destruction memo in the weeks leading up to the first Security and Exchange Commission subpoenas that were issued. Though there are no firm rules on how long accounting firms must retain documents, any deliberate destruction of documents subject to subpoena is illegal. I think Arthur Anderson did have a conflicting relationship with Enron. Enron was their biggest and closest client. By doing Enron’s audits,