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ENRON

CONTENT

UNETHICAL ISSUES DILEMMA COSTRECOMMENDATI

ON

Company Origins American: energy, commodities and service company.

Based on Houston Texas.

Vision: Enron's vision is to become the world's leading energy company.

Enron started 1985 by merger of Houston Natural Gas and Internorth (first nationwide natural gas

pipeline network in Houston, Texas.)

MERGER

Background of Enron Success

1990’s

largest integrated natural gas and

electricity companies in the world

Largest developer

producers of electricity in the world

major supplier of solar and wind renewable

energy worldwide

Enron pioneered innovative trading products:

gas n weather future• Read more:

http://www.referenceforbusiness.com/history2/57/Enron-Corporation.html#ixzz3hSksWayw

Before it Bankruptcy in 2001 Enron:

Employed 20,000 staff

Claimed Revenues of nearly $101

billion.

Timeline Of Enron Collapse

8/November/2001:

Company restating its profits for the previous 4 years.

It admitted accounting errors, inflating income by $586 million since 1997.

Enron was forced to admit do false account, profit total false nearly $600 million since 1997.

2/December/2001

• Enron filed for bankruptcy protection.

12/December/2001

CEO Jo Berardino, Anderson testified that his firm discovered possible illegal acts committed by Enron.

9/January/2002

US justice launches criminal investigation.

UNETHICAL ISSUESDISHONESTY INTEGRITY

Issues1. Corporate IssuesThe Enron deception was practicing the accounting fraud by:creating the SPS (Special Purpose Entity) which exchange the debt and failing investment into sales revenue in financial statement. For Example: This Fraud is done by the cooperation of Enron CFO, few of Enron people and Andersen’s chief auditor for Enron2. Auditing and Accounting IssuesThey prepared fraud financial statement of their: balance sheet cash flow statements.They showed profits that were only an assumption and never existed in reality.

3. Pension IssuesEnron sponsored a retirement plan – a “401(k)” –ofor its employees to which they can contribute a portion of their pay on a tax-

deferred basis.Consequently, the company’s bankruptcy has substantially reducedovalue of its employees’ retirement accounts4. Banking IssuesBanking companies, notably Citigroup and J.P. Morgan Chase, were involved:othe investment bankingothe commercial banking businesses with Enron.• These companies also go down when Enron bankruptcy.

DILEMMA COST

AFFECTED STAKEHOLDERS

INVESTOR

• For Example: That’s exactly what happened to Arthur Andersen, formerly one of the “Big Five” auditing firms, when it lost its license to operate after being involved in the Enron scandal

SHAREHOLDERSINVESTORS

CUSTOMERS/CLIENTS EMPLOYEES

RECOMMENDATION

1. Examine Ethical climate

2. Train employees

3. Understand and practice company Values: Respect: We treat others as we would like to be treated ourselves. We do not tolerate abusive or

disrespectful treatment. Ruthlessness, callousness and arrogance don't belong here.

Integrity: We work with customers and prospects openly, honestly and sincerely. When we say we will do something, we will do it; when we say we cannot or will not do something, then we won't do it.

Communication: We have an obligation to communicate. Here, we take the time to talk with one another…and to listen. We believe that information is meant to move and that information moves people.

Excellence: We are satisfied with nothing less than the very best in everything we do. We will continue to raise the bar for everyone. The great fun here will be for all of us to discover just how good we can really be.