Ethicsgroup (2)


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Ethicsgroup (2)

  1. 1. Indian Context of Ethics Case Study on Enron Corporation Case Analysts: Gunnidhee Patel & Ashish k Barnwal
  2. 2. Ethics in India <ul><li>Ethics: The word ethics has come from the Latin word “ ethos ” meaning character or manner. In this sense , ethics is a code of conduct. </li></ul><ul><li>Business ethics means conducting business activities in a fair manner . </li></ul>
  3. 3. Organizational Ethics: 4 «bottom lines»
  4. 4. Organization Profile <ul><li>Founded : Omaha, Nebraska, 1985 </li></ul><ul><li>Headquarters: Houston, Texas, United States </li></ul><ul><li>Key people: Kenneth Lay, Founder, former Chairman and CEO Industry: formerly Energy </li></ul><ul><li>Revenue: $101 billion (in 2000) </li></ul><ul><li>Employees: approx. 22,000 in 2000 approx. 4 as of 2008 </li></ul><ul><li>. Website: </li></ul>
  5. 5. Enron’s Dabhol Power Project <ul><li>Enron is a majority owner of Dabhol, a massive combined-cycle power plant on the western coast of India's Maharashtra state. The Dabhol power plant was initiated in 1992 and took nine years to commence operation. The total project cost is $2.9 billion. Enron owns 65%, Bechtel Enterprises owns 10%, General Electric owns 10%, and the Maharashtra State Electricity Board owns 15%. The project is 2,200 megawatts , which Enron says is the largest gas-fired power plant in the world. The plant closed in June 2001, due to a payment and contract dispute between the Maharashtra state government and the plant owners. Enron says it incurred over $1 billion in costs for the plant. </li></ul>
  6. 6. CHRONOLOGY OF DABHOL POWER PROJECT <ul><li>enron word.doc </li></ul>
  7. 7. <ul><li>No impact study; no alternative site </li></ul><ul><li>Use of drinking water from population (8 300 liters / minute) replacement of 10% of water for villages </li></ul><ul><li>Pollution of rivers by used waters </li></ul><ul><li>Contamination of sea-water (down-load of 13 million liters of warm water per day) </li></ul><ul><li>Destruction of plantations (mango, cashew) and fisheries </li></ul>Environmental Scandal : Ecological Abuse
  8. 8. Economic Scandal: <ul><li>Between 1 and 2 M$ in hidden debts </li></ul><ul><li>Artificial increase of stock value </li></ul><ul><li>Dec 2000: top executives were paid 750 million $ in bonuses whereas the declared net profit was 975 million $ </li></ul>False Profitability
  9. 9. <ul><li>29 top executives : 1M $ in stock options before bankruptcy whereas employees were forbidden to sell their options </li></ul><ul><li>CEO alone : sold 67m $ worth of options </li></ul><ul><li>4 500 employees were laid-off. Severance package: 13 500 $ per employee </li></ul><ul><li>63% of the 21,000 employees lost all their pension plan (plan 401K) </li></ul>Political Scandal: Lack of Equity
  10. 10. Human right violence <ul><li>Displacement of 2 000 people and appropriation of land without prior notification </li></ul><ul><li>Arrest of 300 pacific protestors a day, average of 8-day detention period, without trial and with violation of human dignity </li></ul><ul><li>Demonstrators, mostly women, dragged from their homes, and beaten (lath charge, tear gassing, helicopters), detention, humiliation, intimidation </li></ul>
  11. 11. <ul><li>Enron : denial; legal attack for breach of contract; lobbying; corruption; intimidation; etc. </li></ul><ul><li>Financial analysts : no investigation of allegations, nor of “note 16” </li></ul><ul><li>Monitoring bodies ineffectual </li></ul><ul><li>Media : a few articles on tensions in India; no field investigations, no images </li></ul><ul><li>Still today : the Enron scandal: a financial scandal for most people </li></ul>Response of Social Actors : to Ethical Issues
  12. 12. Lessons to learn from the Case <ul><li>Ethics cannot be fragmented </li></ul><ul><li>Company governance must integrate the active participation of all stakeholders who affect the organization's activities or who are affected by these activities </li></ul><ul><li>And in all four domains : profitability, equity, dignity and viability </li></ul>
  13. 13. References <ul><li>Shastri, Falguni C.( 2005), Corporate Governance , Book Enclave, Jaipur </li></ul><ul><li>Gavai, Dr. A.K.,( 20080, Business Ethics, Himalaya Publishing House Pvt. Ltd., Mumbai </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li>$FILE/aab05770.pdf </li></ul><ul><li> </li></ul><ul><li> </li></ul>
  14. 14. <ul><ul><ul><ul><li>Thank you </li></ul></ul></ul></ul>
  15. 15. Ethics in Indian Industry