The case traces the rise of Enron, covering the company's business innovations, personnel management, and risk management processes. It then examines the company's dramatic fall including the extension of its trading model into questionable new businesses, the financial reporting problems, and governance breakdowns inside and outside the firm. The case offers students an opportunity to explore why Enron failed and to understand the systemic problems in governance that affected its board of directors, the audit committee, the external auditors, and financial analysts.
SO FROM ALL THE PLAYERS KEN LAY JEFF SKILLING ANDY FASTOW LOU PAI
ENRON TIMELINE 1985: Enron formed Aug 2001 The beginning of the end at Enron: Jeff Skilling publicly announced he was quitting as CEO. For many people, both inside and outside Enron, that was when it became clear something was seriously wrong. Enron's stock fell 6 percent the next day, to $40.25. It would never close that high again. Oct 2001: Enron reports $638m third quarter loss and $1.2bn fall in shareholder equity Securities and Exchange Commission begins inquiry into firm.To Ken Lay and Jeff Skilling, Enron's CFO wasn't always the bad guy. Indeed, Andrew Fastow was a longtime Skilling protege, and Lay had always viewed him as indispensable. After Lay became CEO again, one of his early moves was to negotiate a lucrative extension of Fastow's contract, and Lay defended Fastow in an October 23 conference call, saying "I and the board of directors continue to have the highest faith and confidence in Andy." The next day, Fastow was gone, and Lay has recently claimed that the CFO's larcenous behavior sank the company
Nov 2001: Enron shares sink to 10-year lows as buyout deal falls through and further losses are revealed at the firm Dec 2001: Enron files for Chapter 11 bankruptcy 2002: Criminal investigation launched
2004: Skilling and Lay charged over Enron collapse Former finance chief. Among the 77 people on the list of potential witnesses for the prosecution, no one was closer to Jeff Skilling than Kenneth Duane Rice. Rice's role as CEO of Enron's broadband business, perhaps Enron's most brazen illusion, placed him onstage in the investigation of Enron. In May 2003, Rice was among seven broadband executives charged in a 218-count criminal indictment. For a year, Rice swore he'd done nothing wrong. Then, on July 30, 2004, Rice cut his deal. He later testified that it was at Skilling's urging that he lied about the state of Enron's broadband network. Andrew Fastow pleads guilty to criminal charges and agrees a 10-year jail term 2005: For nearly two years after FBI agents first led Richard Causey, Enron's former chief accounting officer, into the federal courthouse in handcuffs, he asserted his innocence, claiming that there was nothing wrong with Enron's accounting. In doing so, he provided a valuable buffer for Lay and Skilling, who will insist they relied on his expertise. But three days after Christmas, Causey -- known at Enron as the "Pillsbury Doughboy"-- agreed to plead guilty to a single count of securities fraud, cooperate with government prosecutors, and serve up to seven years in prison. Jan 2006: Enron trial begins
Discussion on ethics in business is necessary because business can become unethical, and there are plenty of evidences as in today on unethical corporate practices.
Adam Smith opined that ‘People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices
Business ethics involves set of actions that make company more favorable to public and employees. It defines the code of conduct for employees It makes the company activities more legal and policies more social