Shannie Raya
Enron Response
November 13, 2013
Mgt 3310

Enron Response
Shannie #1: identify and discuss the key ethical issues arising in the video.

Enron, the ‘big idea.’ Enron earned the biggest profits as a stock trading company who focused their ideas on the basis of fraudulent behavior that was made acceptable by the CEO (Jeffrey Skillings). A structured company such as Enron made sure that the employees shared the same mentality the management team aspired; to make more profitable earnings. ‘Ask why?’ was the known phrase for the skilled accountants working behind the desk who scammed their way through stock trading; trading stock with the advantage of choosing the winning side because of the made up corporations that invested money into Enron. Regulating and selling stock that they didn’t have tangible access, managing these exchanges to the outside world was an easy task to carry out due to Andrew Fastow. Fastow hid the debt of failed projects that sky rocketed to an x-amount of billions of dollars in actual debt instead of return investments on stocks. The major ethical issues that we found arising from the video (Enron) for our management theory and practice course; are the accounts that were not adding up on behalf of the shareholders and analyst who noticed that the dots were not connecting when money was coming out of made up corporations. Consequently, Skilling’s and Lay acted on bribery, insider trading, money laundering, monopoly dictatorship and conspiracy because of their unethical morals. The accountants were masking a form of illegal trading and reporting for the profits instead of declining losses. The spiraling effect of unethical morals behind the management team as well as the employees who did not ‘ask why?’ created a bigger impact to the corporation that didn’t listen to the signs and warnings that end was near for Enron. These two individuals led the Enron a multi-million dollar corporation to the ruin because of their self-imposed selfishness to gain more money for themselves.

Question #3: identify and explain at least two situations to the issues identified. Be specific.
I think one of the reasons it was so easy to hide their company’s losses and still continue to push recklessly forward is because Enron utilized Mark-to-Marketing accounting. This allowed them to report future value or earnings even if there were no current ones, but even without such accounting methods, Enron and its accounting firms (Arthur Andersen) would’ve simply ‘cooked’ their books. Enron’s formation of the Dabhol Power Company would be one key situation that ultimately would