What led to the collapse of Enron under Lay and Skilling?
The discussed collapse of the corporation was caused by the fact that both Lay and Skilling violated the rules prescribed by the Enron Code of Ethics, and they did it many times. They both knew the ethical principles of the company but their desire to get a financial profit and hide the company’s loss appeared to be stronger than their consciousness and responsibility. By the case, Kenneth Lay (a former executive officer) was caught in more than eleven cases of fraud.
What is more, investigating officers found out that he made a series of attempts to hide Enron’s crimes. As for Jeff Skilling, he was convicted of more than thirty cases of wire fraud and insider trading. Thus, these people’s criminal actions laid the groundwork for the ethical collapse of the company.
How did the top leadership at Enron undermine the foundational values of the Enron Code of Ethics?
By the Enron Code of Ethics, employees and chief executive officers had to work relying on the primary values of the company that included excellence, respect, integrity, and communication. Numerous members of the top leadership of the company did not follow the rules. Worse still, they participated in money laundering; they deceived their business partners and tried to hide these numerous illegal acts. Performing these misdeeds, Enron’s top leadership was disrupting the basic ethical values of the company. The working strategy that they were following had nothing to do with the common values that are important for those business people who would like to work honestly.
Given Kenneth Lay’s and Jeff Skilling’s operating beliefs and the Enron Code of Ethics, what expectations regarding ethical decisions and actions should Enron’s employees reasonably have had?
To begin with, every company is a structure that consists of elements that depend on each other. If top management performs certain illegal acts, such a situation influences their subordinates. It seems almost impossible that the employees could have been out of touch with what was happening in their company on a higher level. Taking it into consideration, we can say that Enron’s employees did not expect much from the top management of the company. Seeing the series of illegal acts performed by the top management, other employees were likely to think that it was a common practice. Thus, Enron’s employees did not believe following the Enron Code of Ethics to be an essential element of the working process.
How did Enron’s corporate culture promote unethical decisions and actions?
In general, Enron’s actual corporate culture had little in common with the one that had been prescribed by Enron’s Code of Ethics. According to the data that was revealed during the investigation, many employees were encouraged to lie to hide the consequences of their managers’ illegal acts. The employers themselves thought that the lie was not a grave offense, and they were doing anything to avoid being caught. As for the company and its role in promoting ethical values, we can be sure that it did a little to make its employers more conscious and responsible. The top management of the company did not try to establish proper financial control of the operations and this is why the company ended up in such a position.
How did the investment banking community contribute to the ethical collapse of Enron?
The company had a lot of famous business partners such as J.P. Morgan and Citigroup and to increase its profit and hide losses, it did a series of speculations with prepays. Within a short time, its speculations were unsealed and it resulted in a thorough investigation.
Elkind, P., McLean, B. (2004). Ken Lay flunks ignorance test. Web.
Enron Code of Ethics. The Smoking Gun. Web.
Enron: Houston Chronicle Special Report. (2004). Houston Chronicle. Web.