安然(Enron)事件分析

Introduction

Since 2001, the business world has weathered scandal after scandal. Again many

ethical problems had aroused people

’

s attention again. Is business ethic? Why is

business ethics important? How to improve ethics in business world? According to

Enron

’

s case, I will focus on the business ethic problem and discuss it in this essay.

What happened in Enron?

According

to

the

case

of

Skilling

vs.

United

States

in

the

Supreme

Court

of

United

States,

as

a

big

energy

trader

in

the

world,

Enron

ranked

as

the

seventh

revenue grossing company in the United States.

Jeffery Skilling, a long-time chief executive officer of Enron, resigned in August

2001. Less than four months later, Enron crashed into bankruptcy, and its stock

plummeted in value. After an investigation through which uncovered an elaborate

conspiracy to prop up Enron’s stock prices by overstating the company’s financial

well-being, the U.S. Federal Government prosecuted dozens of Enron employees who

participated in the scheme include Skilling and two main executives in Enron. Count

1 of the indictment charged Skilling with, inter alia, conspiracy to commit

“honest

-

services” wire fraud, by depriving Enron and

its shareholders of the

intangible right of his honest services. Skilling was also charged with over 25

substantive counts of securities fraud, wire fraud, making false representatio

ns to

Enron’s auditors, and insider trading.

[1] (SUPREME COURT OF THE UNITED

STATES, p1)

Justices

’

decision and honest-service statute

Skilling appealed the decision which was made by the court and raised two

questions after the voir dire in 2006. First, he felt that he acquired an unfair trial under

pretrial publicity and community prejudice. Second, he asserted that it is improperly

for jury to convict him conspiracy to commit honest-services wire fraud.

According to the jury

’

s conviction, Jeffery Skilling committed

“

honest- service

”

wire

fraud. However, the case expresses:

“

in proscribing fraudulent deprivations of the

intangible right of honest services, according to 18 U.S.C.S. §

1346, Congress only

intended at least to reach schemes to defraud involving bribes and kickbacks

”

. [2]

(SUPEREME COURT OF UNITED STATES, p 1) Based on this aspect, Skilling

appealed. But his claim was rejected by the Court o Appeals because

“

it did not

address Skilling’s argument that the honest

-services statute, if not interpreted to

exclude his actions, should be invalidated as unconstitutionally vague

”

. [2]

(SUPEREME COURT OF UNITED STATES, p 1)

According to Justice Ginsburg

’

s decision, honest- service statue should be in part

advocated in Skilling

’

s case because proscribing fraudulent deprivations of

“

the

intangible right of honest services

”

should be at least included in bribes and kickbacks.

However, Skilling did not do the fraudulence as this. Justice Ginsburg

’

s opinions are

as follow:

We disagree with the

Fifth Circuit’s honest

-services ruling. In processing

proscribing

fraudulent deprivations of “the intangible right of honest services,”

§

1346,

Congress intended at least to reach schemes to defraud involving

bribes and kickbacks.

Construing the honest-services statute to extend beyond

that core meaning, would encounter a vagueness shoal. Construing the

honest- services statute to extend beyond that core meaning, we conclude,

would encounter a vagueness shoal. We therefore hold that §

1346 covers only

bribery and kickback schemes. Because Skilling’s alleged misconduct

entailed no bribe or kickback, it does not fall within §1346’s proscription. We

therefore affirm in part advocate in part. [2] (

SUPEREME COURT OF UNITED

STA

TES, p 1)

Ethical discussion

As

the Enron scandal

wore on,

many other companies such as WorldCom,

Xerox,

and Merck collapsed and became financial scandal as well. As the question mentioned

at

beginning,

is

business

ethical?

A

survey

of

high

school

students

conducted

by

Junior

Achievement

and

Deloitte

Touche

found

that

only

eighteen

percent

believe

business

leaders

are

ethical.

[3]

(gs,

p

32)

That

is

to

say

,

it

is

time

for

the

business

field to

improve their ethical

level,

in order to rebuild their

image.

However,

is

it

necessary

to

do

this?

The

answer

is

absolutely

“

yes

”

and

the

reasons

are

as

follows:

First one is

cost of unethical behavior

. Companies would lose their customers if

they are not responsible. It costs corporations a huge amount of money and time to

rebuild their reputation. Nestlé

is probably a good example. From the 1970s to 1980s,

Nestlé

promoted infant formula in baby milk with misleading and harmful strategies

that violated the International Code of Marketing of Breastmilk Substitutes and put

babies at risk. A Nestlé

boycott was launched at that time all over the world,

especially in the U.S. In order to continue business, headquarter decided to recall the

entire harmful baby milk in the less economically developed countries where their

breast milk substitutes were sold mostly. And set up the independent Nestlé

Baby

Milk Product Review Committee. Through these sincere efforts, slowly

, Nestlé

acquired people

’

s confirmation, and in 1983, the United States Teachers Unions, the

biggest organization in the boycott, repealed the boycott to

Nestlé’

s products.

However, Nestlé

expensed huge amount of money to communicate with the public

and improve their products annually during that period. The same situation in Enron,

but the cost of the unethical behavior for Enron is bankruptcy

. So cost is the first

reason for a company to be ethical. [4] (The Internet Classics Archive

.

Web Baby

Milk Action

)

Second is

impact on reputation

. Reputation or goodwill is the determinant

element of a corporation, although it seems ridiculous to some business people. A

company with a high reputation can absorb more and more customers and occupied

more market shares to maximize their profit. In contrast, low reputation company not

only cannot maintain their current customers and market shares, but loses them and

even goes into bankruptcy

. Because of overrating the financial well-being, Enron

’

s

stock was popular among stock agencies and was highly recommended as well.

However, after the investigation, Enron

’

s share plummeted. Enron lost credit to their

shareholders who sold their stocks crazily in the four months. From ninety dollars, the

highest share

price, to pennies per share, shareholders’ wealth shr

ank heavily, and

some people fell. Enron

’

s reputation fell to zero or even negative with the falling of its