Ethics

Originally a gas pipeline company and, with time growing into the worlds largest trader in gas, electricity, water, and various other commodities such as bandwidth, Enron Corporation had built itself a reputation as a respectable corporate entity. Indeed, many people, including corporate organizations, looked up to Enron as a role model and a representative of corporate American organizations not only in the United States but also in other countries that looked up to America in terms of corporate practice and leadership. In October of 2001 however, things took a different turn when Enron was forced to disclose that its bookkeeping practices relating to its profits were, at the bare minimum, flawed, if not deceptive.

At this time, losses had already wiped out Enron corporations profits, yet Enron for some reason did not properly document this critical information. When the situation got out of hand and eventually came to light, Enrons corporations shareholders started having second thoughts and doubts about the company, for the first time, and immediately started selling off their shares in the company.

From there, the rest is history as Enron Corporation was put under intense international scrutiny and pressure that ultimately saw the worlds biggest trader in gas, electricity, water, and other commodities collapse.

Part 1
The investigations into the Enron Corporation scandal unearthed various unethical and illegal practices brought about by various stakeholders in the company. Several people were implicated in the scandal that rocked the worlds largest trader in electricity, gas, water, and a host of other commodities, like bandwidth.

As a result of massive corrupt dealings and scandals perpetuated under the watch of the executive managers, the company was obliged to reveal that its books portrayed a falsified situation of the company in October 2001. Indeed, the real situation was soon to be discovered to be one whereby the company was running at huge losses, while records purported that it was making profits.

Immediately word went out that Enron was making losses, some of the shareholders decided to sell off their shares in the company. However, the companys top managers were quick to assure investors that their shares were safe, and persuaded them not to sell their shares. Interestingly, these same Enron executives and managers were quick to sell off their shares at the company while all along influencing other shareholders not to sell their shares.

As if that is not enough, the top company management went ahead and changed the companys pension plan, effectively freezing employee retirement benefits.

Investigations further revealed that the former government chief regulator of energy business manipulated legislation to allow Enron to speculate in electricity, before resigning her government job and joining Enron. On the other hand, Enron was discovered to have largely contributed to The Republican and Democratic political parties in the year 2000.

Generally, at the close of investigations, it was revealed that the Enron scandal was aided and abated by a combination of factors, identified as corporate, fiscal and political aspects. Indeed, it was exposed that the former government chief regulator of energy business, who resigned her government position to join the Enron board, was the wife of a powerful Republican senator.

The adverse mention and feature of government and state officials in the affairs of the company points out to the political interference that contributed to the failure of the company. This interference involved both the Republican and Democratic parties, government regulation agencies and individual politicians and government employees. Likewise, Enron senior managers engaged in the illegal activity of offering corporate political contributions to the Democratic and Republican political parties.

The aspect of fiscal failure was evident when the company was revealed to have been posting false and misleading financial reports and statuses. This was perpetuated by the companys accounts department with the awareness, and perhaps blessings of the top company executives.

At the corporate level, failure was manifested in terms of the companys standing in the corporate world. Enron was a leading company in the world of business, which was otherwise supposed to be the envy and an example to other smaller corporate entities. All this turned out to be just a faade because the real situation was that, the company was failing with countless scams, underhand dealings, political machinations and nothing worth of emulating (OpenSecrets.org, 2002).

Considering these circumstances, it is clear that the Enron scandal was marred by unethical practices and illegal actions. These deeds were committed by individuals who were identified following investigations that were carried out by the Securities Exchange Commission (SEC).

Notably, auditors from Arthur Andersen auditing firm were said to have been compromised in their auditing of Enron. This auditing firm was aware of the financial crisis facing Enron, yet they did not advise the management accordingly, and in good time. Instead, they chose to act as if everything was in order. This is unethical because auditing practicing standards demand transparency at all times. The firm went further to instruct employees to destroy all audit material relating to Enron. This was an outright illegal practice, obviously serving to conceal information.

Any organizations senior security professionals have a duty at all times to not only to the company but also to the employees, to its clients, and to a professional standard of ethics, and not to any specific senior executives(Time, Inc., 2002). The Arthur Anderson auditing company was in outright breach of this clause.

As clearly evident, the actions of Arthur Andersens auditors were in violation of spelt out regulations and codes of conduct. Instead, the firm employees went ahead to engage in illegal and unethical practices. Specifically, it is illegal to destroy any organizations audit material.

The actual impact of the Enron scandal on the United States of America and its citizens included the following.

Loss of public confidence in Corporate America.

Loss of corporations confidence in the five major auditing and consulting firms in the United States, one of which was Arthur Andersen.

Loss of confidence in corporate pension funds by government, unions, associations, and employees.

Concern of foreign countries about the economic stability of the United States.

The downward spiral in the stock market, which affected other corporations.

Some of the positive impacts of this scandal on the other hand were

The review and revision of how corporate and public funds are used for pension funds.

The discussion and review of corporate contributions to political parties and individual politicians.

The passage of the Sarbanes-Oxley Act, which specifically prohibits an auditor from simultaneously providing nonauditing services (University of Cincinnati College of Law, 2004).

Part 2If Enrons senior security professional was aware of what was happening, he should have taken one or all of the following steps to bring the situation to the attention of the proper authorities.

Creating an appropriate environment that prevents unethical behavior, by designing, developing, and implementing an organization-wide ethics program.

Documenting and reporting any and all unethical behavior that has occurred to senior management immediately.

Enforcing the organizations policies and procedures, by arresting the managers who were engaged in kickbacks, conflicts of interest, sexual harassment and preferential treatment of some employees at the expense of others.

Reporting any incidents of unethical or illegal behavior to the appropriate law enforcement and government agencies if the organization fails to act upon the information brought to its attention.

Investigating all allegations pertaining to breaches and violations of the business and ethics policies and to reporting on the findings to the relevant authorities.

If I was the senior security professional at Enron and privy to what was taking place, I would have taken the following steps

First of all, I would record and report any unethical conduct to senior managers as soon as I was certain of the facts.

I would also speak to the concerned individuals, and warn them that if they continued engaging in unethical practices, I would take the next appropriate action.

I would launch investigations and gather evidence to present to government and other relevant authorities for action to be taken.

I would enforce the organizations rules and policies by deterring the violators in form of arrests.

I would initiate a system for reporting unethical incidents to the senior security professionals office, and make it possible to report either in person, by phone, email or in writing.

I would also propose the initiation of a training program for all personnel, whereby all new employees undergo an orientation, in addition to regular training for existing employees. The program would provide examples of all behaviors and acts that are considered unethical, as well as their consequences (Hecht, 2003a).

However, there may be some reasons that might have prevented me, as the senior security professional, from reporting the situation to the relevant authorities and shareholders. Some of these reasons include the following

To begin with, reluctance by senior managers and the same authorities I am supposed to report to, to take action might demotivate the security official from reporting similar breach of ethics cases.

On the other hand, meddling by the authorities and undue interference with investigations and findings might also be prohibitive, since the outcome of findings may be altered, and I would therefore be discouraged from pursuing the cases.

I would equally be prevented by the lack of a clear policy and ethical guideline for the organization, since I would not have any reference point for my actions.

Finally, the lack of the necessary support and equipment to detect and prevent unethical conduct might also have prevented the security professional from executing his work as required.

CONCLUSION

The Enron scandal did not only affect the American population, but it also affected other corporate entities and individuals throughout the entire world. Due to a myriad of unethical and illegal practices that were rampant in the Corporation, the collapse of Enron was inevitable. The rot seems to have been so deeply entrenched that even while investigations were going on, massive illegal and unethical practices still went on. For instance, while the top managers persuaded the shareholders not to sell their shares, they sold theirs. This is not only unethical, but also selfish and simply in bad faith. At the same time, there were concerted efforts to destroy the Corporations audit reports, a purely unethical and illegal practice. The implication of government officials in manipulation of legislation to make way for corrupt and illegal deals, the questionable actions of top managers at the company and the involvement of Enron in political patronage were some of the unprocedural maneuvers that were rife at the Corporation, and which investigations brought to the fore, among other inappropriate corporate acts committed by several other individuals across the corporate, government and political sectors.

Notably, glaring conflict of interest is revealed in the case where a former government chief regulator of energy business specifically manipulates legislation before resigning her government job to join Enron. Moreover, she is the wife of a powerful senator.

This scenario paints the picture of a high level, intricate and well-orchestrated syndicate that is well connected at the right places. Such external and political interference coupled with the complacency of top executives, in addition to outright unethical and illegal business practices at the corporation led to its eventual collapse, affecting millions of individuals and equally numerous corporate organizations which were affiliated to or looked up to Enron in one way or another.

Considering the enormity of Enron as corporate organization, it is probable that virtually the entire corporate world had to be somewhat affected by the Enron scandal and collapse.  It may not be inaccurate to assume that perhaps the scandal had a bearing on the world economic recession that was soon to follow.

In summary, although the duty of security personnel in any organization is to ensure security and the adherence to rules, regulations and ethical practices, given the intricacy of the Enron scandal, it may have been impossible for the security officers in charge to do much.

Clearly, one would not realistically expect any real corrective measure, where the same authorities meant to receive security breach and unethical conduct cases are involved in unethical and fraudulent activities. According to the report of the findings, the Enron case was so scandalous that the Corporation had only one way to go collapse. Sadly, along with it also were several other smaller corporate organizations, which went under due to the impact of the Enron scandal. The effect was in fact felt not only in the United States, but also in many other countries everywhere. Several individuals were also ruined, financially speaking.