Enron and Business Ethics

Running head : Corporate Ethics : A Case Study of Enron

Corporate Ethics : A Case Study of Enron

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A corporate disregard for the social and ethical can be lethal with both long and short term consequences culminating in social harms . Many corporations have and will escape responsibility for such harms due to the sheer difficulty that exists in identifying them . Clarkson (1999 justly asserts one of the core issues with identifying corporate harm is `the fact that private civil litigation depends upon an identifiable victim with

the necessary resources to commence litigation (which weakens the deterrent impact of civil litigation

According to Wikipedia Encyclopedia (2005

Corporate crime refers to criminal practices by individuals that have the legal authority to speak for a corporation or company . These can include presidents , CEOs , managers , directors and chairmen , sales people , agents , or anyone within a company that has authority to act on behalf of the firm . Examples of criminal behavior in most jurisdictions include : antitrust violations , fraud , damage to the environment in violation of environmental legislation , exploitation of labor in violation of labor laws , and failure to maintain a fiduciary responsibility towards shareholders

These complexities in identifying corporate crimes , Invisibility unaccountability and inappropriate sanctions are worsened by the `class bias of courts . Businessmen , will more often than not , avoid legal action probably owing to the fact that they are able to influence it (Slapper and Tombs , 1999 :3 . It is usually in intense circumstances that corporate crime is identified but identification is no guarantee for conviction

Once a corporate crime has been identified , there is the tendency for the corporation to act as the blanket under which the above-mentioned `individual authority ' seizes operation . But as Clarkson (1998 maintains `it is the individual within the company who is the culpable agent deserving punishment . It is granted , that whilst corporations reject individual responsibility , punishable omissions are limited but the implications of pursuing individuals can prove two-fold

Perhaps the foremost social and ethical responsibility levied upon private and public organisation in recent decades is the adoption of fair and just accounting practices . This responsibility is being increasingly codified in laws and various accounting standards . Its influence is becoming increasingly pervasive through a constant series of new and improved standards as well as steady enlargement in the size and scope of administering agencies

The Enron scandal has given a new dimension to the corporate scandals in the history of United States . Due to the collapse of the Enron Corporation the notion of the off-balance financing or external funding not recognised on the issuing company 's financial statements has gained much importance . The SPE was the form of the off balance sheet finance which was used by the Management of the Enron Corporation . It is thought that the management used the SPE to hide the external liabilities from the investors and regulators

Charles Mulford , co-author of The Financial Numbers Game , says "The accounting model isn 't broken , financial reporting just needs some tweaks " The Enron...