Sixteen years, the story of the meteoric rise and peculiar fall of the Enron

Corporation. Knowing the Enron Corporation grew from Americans seventh largest
company, employing 20,000 employees in more than 40 countries. But the firms
success turned out to have involved an elaborate scam. Enron lied about its profits
and stands accused of a range of shady dealings, including concealing debts so they
didnt show up in the company accounts more than 6 months after a criminal
inquiry was announced, the guilty parties have still not been brought to justice.

The Enron story is one of money and politics, which are two areas that
embody the culture of big business in America. The film does a great job of
illustrating the unwillingness culture that allowed Enron to rise to prominence while
simultaneously exposing the rabid fraud behind the facade of success. Along with
the rise and fall of the Enron stock price, one of the consistent themes of the film is
the scandals and the lies behind the companys success. The film separates each
scandal and builds off that scandal to show how Enron was able to manipulate the
public into believing its greatness. The name Enron is now synonymous with fraud;
the reality is that greedy smart people created the tragedy.

The main characters and their participation in Enron Case are; Andrew
Fastow: Former chief financial officer, sacked as the scandal unfolded, and alleged
author of the deceptive accounting practices; Kenneth Lay: Enrons former chief
executive and chairman since 1986 refused to testify at the moment after saying he
had been pre-judged; David Duncan: Enrons chief author at Andersen who
shredded key documents relating to the case. It was his job to check Enrons

accounts; Joseph Berardino: Andersens chief executive, vigorously defended his

firms role ibn the affair; Jeffrey Skilling: Enrons chief executive in the first half of
2001 denied knowing that anything was wrong at the firm; Sherron Watkins: Enron
employee and Whistleblower of the scandal. She claimed that Ken Lay was
duped and placed the blame on Jeffrey Skilling and Andrew Fastow.

And also other person who are part of Enron Case but they are not the main
character of Enron Case are; Ben F. Glisan Jr.: From the inner circle to a Jail Cell;
Mark E. Koenig: The conference call that raised eyebrows; Vincent J. Kaminski:
Sounding the alarm but unable to prevail; Greg Whalley: Fostering some fun on the
trading floor; Nancy Temple: An Andersen lawyer and troubling memos; Kenneth D.
Rice: Consummate salesman from the broadband unit; Rebecca Mark: A global
ambassador, now off the fast track; and many more.

For this case to highlights, in 2001 Employees lost 1.2 Billion dollars in
retirement funds. Retirees lost 2 Billion dollars in pension funds. Enrons top
executives cashed in 116 Million in stock. Criminal Charges: Guilty Pleas: 15
convictions 6 acquittals/pending cases: 11 California traders pled guilty to wine
fraud. 4 Merrill Lynch executives convicted of fraud in the Nigerian Barge Case. Ken
Lay and Jeff Skilling will go to trial in January 2006. After the bankruptcy of Enron
numerous executives such as former chief financial officer and treasurer were found
guilty. They were engaged in money laundering, fraud and conspiracy. They violated
the Enron Code of Ethics i.e. respect, integrity, communication and excellence.
Andrew Fastow, former CFO, trading companies have intrinsically volatile earnings

that arent rewarded in the stock market with high valuations on the other hand
high market valuation was necessary to maintain Enron from collapsing. And year
by year they have improvement about the Enron Case, the person involved here
they receive their punishment and give justice who are the victim of the scam.

The Corporate Culture at Enron could have contributed to its bankruptcy in

many ways. Its corporate culture support the unethical behavior about the relating
money of the Enron Company. Enron has been described as having a culture of
arrogance that led people to believe that they could handle increasingly greater risk
without encountering any danger. The culture did little to promote the values of
respect and integrity. These values were undermined through the companys
emphasis on decentralization, its employee performance appraisals, and its
compensation program.

The overall corporate culture depicts the arrogance in each level of the
company. The employees believed that they could deal with extra risk without any
danger. The undeclared message was you can make as much money you want until
you dont get caught. The corporate culture took very less efforts to promote the
code of ethics. Instead the company gave more emphasis on decentralization,
employee appraisals and its compensation program. The compensation plant put
the employees first rather than its shareholders and cheerful employees to crack
the rules and inflate the contracts even though no real cash generated.

Enrons compensation plan seemed oriented enriching executives rather

than generating profits for shareholders and encouraged people to break rules and
inflate the values of contracts even though no actual cash was generated. The
company bonus program encouraged the use of non-standard accounting practices
and the inflated valuation of deals on the companys books. Deal inflation became
wide spread within the company as partnerships were created solely to hide losses
and avoid the consequences of owning up to problems.

Each Enron division and business unit was kept separate from the others and
there were inadequate operational and financial controls. As a result very few
people in the organization had the big picture perspective of the companys
operation. All these aspects of the corporate culture at Enron contributed separately to its
eventual bankruptcy. Due to the actions of the Enron executives, the Enron Company went
bankrupt. The loss sustained by investors exceeded $70 billion. Furthermore, these actions cost
both trustees and employees upwards of $2 billion; this total is considered to be a result of
misappropriated investments, pension funds, stock options, and savings plans as a result of the
government regulation and the limited liability status of the Enron Corporation, only a small
amount of the money lost was ever returned.

The Enron Scandal has become legendary. In 2005, four years after the
scandal, a movie was made about the collapse of Enron called Enron: The Smartest
Guys in the Room. As many people know, the Enron Scandal may be the best known
example of Global Corporation owned by a large number of shareholders but run by
its senior management entirely for their own benefit. The senior management says

 Do it right, do it now and do it better that was the motto. He encouraged

employees to be independent, innovative and aggressive. But they consider
themselves representatives of the shareholder only, not the employees. They simply
carried on lying about the financial position of the company in order to push the
value of the shares ever higher in their own interests. They cared nothing for their
employees, the shareholders, the companys, other employees, their customers or
their supplier. They were focused solely on making as much money as possible for
themselves.

In this case no one stop the senior management, why? Because the stock is
rising and the shareholders are getting rich, there is little incentive for the board of
directors and the investment community to question the executives very closely.

This scandal demonstrates the need for significant reforms in accounting and
corporate governance in the United States, as well as for a close look at the ethical
quality of the culture of business generally and business corporations in the United
States. You make money in the new economy in the same ways you make money in
the old economy, by providing goods or services that have real value.

I believe that any correction and any future regulation must begin with an
examination of the political relationships and a reengineering of executive pay
where it is linked to the health of the company for 10 to 20 years down the line.

References

https://www.youtube.com/watch?v=Mi2O1bH8pvw
http://money.howstuffworks.com/cooking-books7.htm