Enron Case

Good Essays
Imane Malihi
Prof. Fred Friend
March 27, 2014
The Downfall of Enron Corporation
“Ethics and integrity are at the core of sustainable long term success … Without them, no strategy can work and, as Enron has demonstrated, enterprises will fail. That’s despite having some of the ‘smartest’ guys in the room.” by Richard Rudden. As the quotation states, ethics and integrity play a key role in the success of any corporation; through these principles, companies can ensure their compliance with law, build a strong relation with their stakeholders, and create a positive reputation in the market. However, this was not the case with Enron, America’s energy giant. This company’s mission statement was stated that its performance was
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By 1993, in spite of the fact that some analysts were criticizing Enron for having high debt, the company was employing financial professionals like Andrew Fastow, assigned by Skilling as a chief financial officer, besides Jeff Skilling who were able to hide Enron’s liabilities and growing the market share of the company on the other hand; Due to this fact, Enron was named for six years between 1996 and 2001 as “America 's Most Innovative Company.”
It was believed by investors and creditors that Enron was the ideal place to invest their money due to the effective performance shown in their financial reports. However, that picture was completely fade as Skilling and his staff of executives were adopting creative accounting strategies for showing that Enron is much powerful that it really is. For this purpose, Skilling was greatly investing and competing with big financial corporations in the labor market by attracting MBA graduates to Enron and this could only be done by providing luxuries and compensation benefits. In particular, the CFO of Enron, Andrew Fastow, who played a big role on hiding the true financial position of Enron from investors, collected more than $40 million in the year before Enron’s collapse. According to Los Angeles times, Enron paid millions to its 140 senior executives, an average of $5.3 million each.
But what about paying taxes? After all, such a financially strong company, of course, had
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