An examination of the events surrounding the Enron scandal

Business

23 December 2006

The Enron Scandal

Introduction

In 2001 , the nation was rocked by the collapse of Enron , a multibillion dollar corporation that employed thousands of people and had affiliations right up to and including The White House itself . Amid the financial chaos and destroyed lives and reputations the collapse left in its wake , questions arose concerning exactly how the catastrophe occurred , why it occurred , and who was involved . In this , these issues will be examined , as will the various ways that Enron 's debacle heightened the awareness

of corporate ethics in the United States

An Overview of the Scandal

It is important , in starting , to understand how Enron rose to power and later imploded . Enron itself came to be born as the result of a 1985 merger of Houston Natural Gas and InterNorth - a Nebraska based gas pipeline company . From the very beginning , Enron had shown some cracks in its fazade , as the company took on huge amounts of debt during its foundation and , as a result of deregulation of gas pipelines , no longer had exclusive right to its own pipelines (Thomas , 2002 . In to solve Enron 's credit and revenue problems , CEO Kenneth Lay enlisted the help of Jeffrey Skilling - a young , sharp banking and finance consultant . Ultimately , Lay was so impressed that he tapped Skilling to join the ranks of Enron , which grew Enron into a major market middleman for energy that would eventually dominate the trading of energy contracts . Skilling also recruited the sharpest and most shrewd businesspeople he could find to join his newly formed team . Ultimately Enron , under Skilling 's leadership , entered the business of trading electrical futures and ultimately founded an Internet commodities trading company that was so successful that Enron 's stock value increased over 50 in one year (Fusaro , et al , 2002 . After many years of seemingly huge successes , more cracks began to appear in the Enron crown . In the final analysis , the conspiracy of Lay , Skilling and others led to the collapse of the company due to fraud , false reporting of revenue , shoddy accounting practices and a general disregard for virtually every tenet of business ethics

With all of the fraud and mismanagement that took place under the gilded roof of Enron , the question arises as to the involvement of others in the scandal , not the least of whom is the firm of Arthur Andersen

Arthur Andersen 's Involvement

No discussion of the Enron Scandal would be complete without a discussion of the involvement of Enron 's accountants , the firm Arthur Andersen , in the scandal itself as well as the subsequent crash of the company from the inside out . In asking officials of Andersen if they were guilty of any wrongdoing in the scandal , they maintain that the crash and burn of Enron was the direct result of Enron 's faulty business model rather than questionable or poor accounting practices (Cable News Network , 2002 . A closer examination of the facts reveals otherwise when the Enron scandal was...