Enron: What Caused the Ethical Collapse

It is non easy to find one single person, who can be blest for the collapse of Enron, because in that location was so many another(prenominal) players in so many levels. We cant find one responsible person, but there are many person who shared the blame for the scandal that dour Enron into the ultimate poster child for fraudulent accounting practices, and caused one of the largest bankruptcies in the us history. The key people involved intern everyy at Enron were the executives, Kenneth direct (Chairman and CEO), Jeffrey Skilling (President and CEO), and Andrew Fastow (CFO).They built up a highly successful company, but before long they began to divert funds into phony investments, and cashed their own stresss, while the legal injury was still high. From October 1999 to November 2001, Lay sold a total 1. 8 one million million million shares for $101 million. Altogether, 29 Enron officers pocketed $1. 2billion from selling Enron shares, while unsuspecting employees went brok e. Simultaneously, while this was acquittance on, more than half of employees 401(k) nest egg, or slightly $1. 2 billion, were invested in Enron stock, which were r wipeoutered worthless.The death chair displace an email to the workers the company had never been stronger and its future growth has never been more certain, so most of the workers held their stocks, because nobody could foresee what was about to happen. In Texas, the Teachers Retirement system lost $35. 7 million in Enron stock, In Florida the pension fund for teachers, province employees, and county workers bought 7 million shares of Enron stock (the fund that covers 650,000 workers and 150,000 retirees estimate they lost $306 million).In the end millions in 401(k) savings were lost. Enron was hiding massive losses by using their strategy of scrawl to market accounting. Fastow was overly found by an internal Enron investigation to project secretly made $30 million from managing one of these partnerships. Outsi de of the company, Arthur Andersen, the colossal accounting firm responsible for Enrons accounting and outside auditing, also shares some blame for the scandal.In theory, companies cant get away with cooking their books because honest, independent accounting firms are looking over their shoulders, protecting the public. In the courting of Enron, however, Arthur Andersen failed at their duties. Four days before Enron reported a reel loss of $618 million for the third quarter of 2001, one of Andersens top lawyers sent out a memo ordering his staff to shred all Enron-related audit documents. Dvid Duncan got the maximum sentence for his crimes is ten grades. redit military rank agencys Credit rating agencies like Moodys, Standard & Poors and Fitch failed to protest investors how risky buying a companys bonds might be, failed to secern any problems with Enron until the company was nearly bankrupt, only downgrading its bonds on 28 November 2001. t S&P and Fitch told a Fortune repo rter they had no idea how Enron made its money. The lack of regulations, and the good relations with the White House, allowed Enron to hold in major influence over policy in America. On economical policy, Enron wanted complete deregulation with no government interference.They got it. On skill policy, Enron wanted no caps on electricity prices in California. They got it. On impose policy, Enron wanted elimination of the corporate alternative minimum tax. They got it. In the end these policies created the perfect environment for their unethical games. The ultimate example occurred throughout the year 2000 during the California Electricity Crisis. The Enron traders exported the cheap electricity from California to another state and later they take it back and sold it for a higher price. This causes 42 billion losses in California in three years.