Business Ethics Assignment: Fall of Enron
Read Chapter 5 in the textbook and the following Additional Reading Materials on Blackboard
• Corporate Governance Definitions
• "Ethics, Schmethics"
• "US Reaches Deal to Reduce Former Enron CEO Jeff Skilling Sentence"
Watch "Enron: The Smartest Guys in the Room" documentaryavailable at
https://archive.org/details/Enron.Os.Mais.Espertos
NOTE - This documentary contains ADULT MATERIAL. Please let me know if you have any questions or concerns before viewing it.
o Offensive Language - The persons featured sometimes quote former Enron employees, including any offensive language that was used by these employees. I have chosen to include this documentary as part of our case study of Enron because it portrays the corporate culture of Enron and the attitudes of Enron's executives, which ultimately led to the company's downfall.
o Nudity - Although one section of this documentary contains nudity, you do NOT have to actually watch this section if you prefer to avoid such material. The section containing nudity begins with a discussion of former Enron executive Lu Pi. When the documentary starts talking about Mr. Pi, you may blank out the screen on your computer while leaving the sound on. At the end of this section, the documentary talks about Mr. Pi leaving Enron with over $300 million. At this point, bring the video back up on screen. This is the method that I use when showing this documentary in a classroom setting, and it will allow you to hear all of the relevant information without viewing any nudity. The audio (sound) portion of this section does not contain any explicit or sexual material.
Instructions:
• Explain your answers to the following questions thoroughly, using complete sentences with correct grammar and spelling.
• To receive substantial credit for this assignment, you must engage in a thorough and thoughtful examination of the issues, using examples from the reading materials and the documentary.
• These questions cannot be fully explained in just one or two sentences, and papers will be graded accordingly.
1. How would you describe Enron's corporate culture? What behaviors did its employees engage in that gave you this opinion?
2. What was "Mark-to-Market" accounting? What is the potential ethical problem with this system? Do you think that the executives at Enron were aware of this problem?
3. Who was Enron's CEO? CFO? Chairman of the Board? What roles did they play in Enron's fraudulent scheme?
4. Were there any "red flags" or clues that should have alerted Enron's Board of Directors that the company's financial situation was not as strong as Skilling and Lay reported it to be?
5. At what point do you think the Enron Board of Directors should have stepped in? What actions could they have taken?
6. Identify three groups of stakeholders who were affected by the unethical conduct of the leaders of Enron. Discuss how each group was affected.