Weiyu Shang
MGT502

Enron Review

Enron used to be the seventh-largest company of the Fortune 500. As an energy firm, Enron supplies natural gas, electricity and communicates with customers. Its services are around the world including trading energy, building power plants and transport equipment. In 1999, the company launched its broadband services unit and Enron Online, the company's website for trading commodities, which soon became the largest business site in the world. The corporate culture has indicated that Enron is arrogant. The upper level manager could not predict the risk of investments. Even the lower level employees will cover the truth instead of communicating with their manager. The reason of these behaviors is the corporate culture. Enron encourages flouting and breaking rules. They believe that the rank system could help their business. They rate their employees every half year and kick out those 20% in bottom. The whole company is under an extremely competition environment. Even the upper level manager claim that their culture can improve employee’s potential. But the fact is the company reliant on the intellectual capital. The company is lacking of creation, rewarded innovation and punishment system.
Fraudulent financial reporting is one of Enron’s problems. In 2000, upper level managers want get more benefits. They changed its financial report which cause its stock price dropped. But it makes Enron face to critical cash shortage. In 2001, the debt came due but Enron do not have enough to pay. In the end, Enron filed for bankruptcy and faced about 400 billion dollar claim.
Lots of upper level managers are involved in the fraud. The Chief Financial Officer, Andrew Fastow, is charged by fraud, money laundering, conspiracy, and one count of obstruction of justice. Former CEO, Jeffrey Skilling, was found guilty and sentenced to twenty-four years in prison. The Chair, Kenneth Lay, was convicted on nineteen counts of fraud, conspiracy, and insider trading.
Those corrupted upper level