Uploaded on

 

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
732
On Slideshare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
21
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Ethics in Organisation Lessons Learnt from Enron BECG-CORE
  • 2. Organizational Ethics: 4 «bottom lines»
  • 3. Enron Scandal
    • Enron stands for the greatest company scandal in the history of the US economy and has become a symbol of corruption for the whole Western economic system.
  • 4. Legend-Out…Low-In
    • 7 th Largest Company
    • 100Billion$+revenue
    • 1.8 Million$ Benefit in 5 yrs.
    • 88.6% increase in 2000
    • New Economy’s Gem
    • CEO named as ‘Messiah in the Energy Sector’ by Economist
  • 5. 4500 employees lost their jobs.
    •   Investors lost some 60 billion dollars within a few days; for many it meant losing their old-age security.
    • The pension fund for the company's employees was obliterated.  
  • 6. Citizen’s trust in the American economic system was destroyed.
    •   Losses on the financial market amounted to the worst stock value loss in peaceful times.
    •   Banks were suspected of collusion.
    •   The auditing firm Arthur Anderson lost its accreditation.  
  • 7. The rules for financial reporting were drastically sharpened:
    • Sarbanes-Oxley Act
    • The close ties of the company's founder, Kenneth Lay, to US President George W. Bush came under sharp criticism.  
  • 8. Political Scandal-Lack of Equity
    • 29 top executives : 1M $ in stock options before bankruptcy whereas employees were forbidden to sell their options
    • CEO alone : sold 67m $ worth of options
    • Severance package: 13 500 $ per employee
    • 63% of the 21,000 employees lost all their pension plan (plan 401K)
  • 9. Dabhol Power Corporation, India
    • One of the few “real” assets of Enron
    • 65% Enron; 10% G.E; 10% Betchel; 15% India,
    • Biggest gas power plant in the world
    • 3 M$ in investment (10% foreign investments in India 1992-2002)
    • Project of 2 200 megawatts
  • 10. Human Rights’ Violation
    • Displacement of 2 000 people and appropriation of land without prior notification
    • Arrest of 300 pacific protestors a day, average of 8-day detention period, without trial and with violation of human dignity
    • Demonstrators, mostly women, dragged from their homes, and beaten (lath charge, tear gassing, helicopters), detention, humiliation, intimidation
  • 11. Environmental Abuse
    • No impact study; no alternative site
    • Mockery of consultation process
    • Use of drinking water from population (8 300 liters / minute)
    • Pollution of rivers by used waters
    • Contamination of sea-water (down-load of 13 million liters of warm water per day)
    • Destruction of plantations (mango, cashew) and fisheries
  • 12. Characteristics of “New Economy” management: Value of Idealized Top
      • CEOs = 500 times average employee salary
      • bonus gone from 3$ to 64$ per 1000$ of value in 10 years
      • aggressive PR; image of “responsibility ”
      • only 1.5% of stock options paid to employees; etc.
  • 13. Complicity or cooptation of social actors :
    • Governments (Enron 7M$ public investments) : USA, Germany, UK, France, Italy, Japan…);
    • Financial analysts; accounting and consultation firms;
    • Business schools; business press; host governments; etc…
  • 14. Watkins Whistle blowing has paid
    • Cleansing of financial markets
    • Some companies enter stocks options into their books as expenses : Boeing, G.E., G.M., Citigroup
    • U.N. Global Compact; CSR; social and environmental accounting; OECD principles, Caux Table; etc.
    • 36% of CEOs more aware of integral responsibilities (but only 10% invest in CSR)
    • 19% of transnational companies have disinvested from countries where Human Rights are violated
  • 15. How to bring accounting firms to integrate CSR norms ?
    • These norms should represent reality
    • ensure company governance
    • make companies responsible not only towards shareholders
    • “ de-co-opt” media and other organizations
    • increase the integrity of business students and managers ?
  • 16. Organizational Ethics, 4 Ways