Business Ethics Enron Report
Business Environment
Business Environment
TABLE OF CONTENTS
INTRODUCTION: EXECUTIVE SUMMARY 3
RATIONALE OF THE PROJECT 3
MAIN OBJECTIVE: 3
METHODOLOGY 3
THE ENRON STORY: BRIEF 4
HOW AND WHAT TYPE OF FRAUDS WERE COMMITTED? 5 THE ROLE OF STOCK OPTIONS 5 THE USE OF OFF-BALANCE SHEET PARTNERSHIPS 5 Example: LJM 5 Chewco 6 LOBBYING 6 ACCOUNTING PRACTICES 6
DIFFERENT ETHICAL DIMENSIONS 7 SOCIAL DIMENSION 8 AFFECTS ON EMPLOYEES AND SHAREHOLDERS 8 ENRON INDIA 8 AGGRESSIVE NATURE OF ENRON: PERSONAL ETHICS 8 ENRON’S ARROGANCE: PERSONAL ETHICS 9 EXECUTIVES ABANDON ENRON 9 POLITICAL DIMENSION: SYSTEMATIC EXPLANATIONS 9 ECONOMIC ISSUES 10 ENRON INDIA: DHABOL PROJECT 10 FATE AND RISKS OF OPIC 10 CALIFORNIA'S DEREGULATION AND SUBSEQUENT ENERGY CRISIS 10 PEAK AND DECLINE OF STOCK PRICE 10 EFFECT OF BANKRUPTCY ON ENRON'S RETIREMENT PLANS 11 ENVIRONMENTAL DIMENSIONS 12 BOLIVIA 12 ENRON INDIA: 12 LEGAL DIMENSION: SYSTEMATIC EXPLANATION OF ETHICS 12 LACK OF REGULATORY CONTROLS 12 ENRON INDIA 13
INDIAN SCAM: Home Trade truths 13 HOME TRADE LAUNCH 14 HOME TRADE FRAUD 14 DIFFERENT ETHICAL DIMENSIONS 14 LEGAL AND POLITICAL ISSUES 14 FAULT IN THE SYSTEM 15 REGULATORS & MEDIA REMAINED UNCONCERNED 15 ECONOMIC ISSUES 15
RECOMMENDATIONS 15
INTRODUCTION: EXECUTIVE SUMMARY
Until its collapse in the fourth quarter of 2001, Enron Corporation was the world’s dominant energy trader, accounting for about one-quarter of all energy trading in the United States. By pioneering the development of large-scale energy trading, Enron was able to transform itself from an “old economy” gas pipeline operator to a “new economy” financial intermediary and market maker.
In the process, Enron’s revenues grew from $13.5 billion in 1991 to a reported $100.8 billion 10 years later. During the last five years of the millennium, Enron delivered a 507% total return for its shareholders, and for many years it was a regular and
Business Environment
TABLE OF CONTENTS
INTRODUCTION: EXECUTIVE SUMMARY 3
RATIONALE OF THE PROJECT 3
MAIN OBJECTIVE: 3
METHODOLOGY 3
THE ENRON STORY: BRIEF 4
HOW AND WHAT TYPE OF FRAUDS WERE COMMITTED? 5 THE ROLE OF STOCK OPTIONS 5 THE USE OF OFF-BALANCE SHEET PARTNERSHIPS 5 Example: LJM 5 Chewco 6 LOBBYING 6 ACCOUNTING PRACTICES 6
DIFFERENT ETHICAL DIMENSIONS 7 SOCIAL DIMENSION 8 AFFECTS ON EMPLOYEES AND SHAREHOLDERS 8 ENRON INDIA 8 AGGRESSIVE NATURE OF ENRON: PERSONAL ETHICS 8 ENRON’S ARROGANCE: PERSONAL ETHICS 9 EXECUTIVES ABANDON ENRON 9 POLITICAL DIMENSION: SYSTEMATIC EXPLANATIONS 9 ECONOMIC ISSUES 10 ENRON INDIA: DHABOL PROJECT 10 FATE AND RISKS OF OPIC 10 CALIFORNIA'S DEREGULATION AND SUBSEQUENT ENERGY CRISIS 10 PEAK AND DECLINE OF STOCK PRICE 10 EFFECT OF BANKRUPTCY ON ENRON'S RETIREMENT PLANS 11 ENVIRONMENTAL DIMENSIONS 12 BOLIVIA 12 ENRON INDIA: 12 LEGAL DIMENSION: SYSTEMATIC EXPLANATION OF ETHICS 12 LACK OF REGULATORY CONTROLS 12 ENRON INDIA 13
INDIAN SCAM: Home Trade truths 13 HOME TRADE LAUNCH 14 HOME TRADE FRAUD 14 DIFFERENT ETHICAL DIMENSIONS 14 LEGAL AND POLITICAL ISSUES 14 FAULT IN THE SYSTEM 15 REGULATORS & MEDIA REMAINED UNCONCERNED 15 ECONOMIC ISSUES 15
RECOMMENDATIONS 15
INTRODUCTION: EXECUTIVE SUMMARY
Until its collapse in the fourth quarter of 2001, Enron Corporation was the world’s dominant energy trader, accounting for about one-quarter of all energy trading in the United States. By pioneering the development of large-scale energy trading, Enron was able to transform itself from an “old economy” gas pipeline operator to a “new economy” financial intermediary and market maker.
In the process, Enron’s revenues grew from $13.5 billion in 1991 to a reported $100.8 billion 10 years later. During the last five years of the millennium, Enron delivered a 507% total return for its shareholders, and for many years it was a regular and