Enron case study PDF

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Enron is a Northern Natural Gas Company which was found in 1930 in Omaha, Nebraska. It was organized by three other company which is North American Light & Power Company, United Light & Railways Company and Lone Star Gas Cooperation. North American Light & Power Company and United Light ...

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Enron is a Northern Natural Gas Company which was found in 1930 in Omaha, Nebraska. It was organized by three other company which is North American Light & Power Company, United Light & Railways Company and Lone Star Gas Cooperation. North American Light & Power Company and United Light & Railways Company owned 35% of the stake in the company and Lone Star Gas Cooperation owned 30% of the stake. Enron Corporation was one of the most threaded companies in the world for gas and electricity lead up to it's own bankruptcy in 2001. The company marketed worldwide natural gas liquids and operated one of the world's largest natural gas transmission systems for over 36,000 miles. It was also one of the world's largest independent electricity developers and producers serving the industrial but also the emerging markets. Enron was a multilateral largest manufacturer of photovoltaic and wind energy, managing the world's leading portfolio of risk management contracts related to natural gas as well as being one of the largest independent petroleum and gas companies in the world. Enron was the biggest wholesale gas and electricity marketer in North America. Enron pioneered the transformation of the efficiency industry inovative trading products, for example gas future and climate future. The company faced difficulties after an upswing in growth in the early 1990s. The size of the losses of Enron were concealed from the inventors. The company came to light after a failure of a merger agreement with Dynegy Inc. in 2001. The company ranked seven at Fortune 500 and its failure was America's largest bankruptcy.

How Enron deal with the unethical problem On December 2nd, 2001 Enron filed for Chapter 11 bankruptcy protection. All the employees less than four month of Skilling resignation. Moreover ex Enron Corporation CEO Jeffrey Skilling was charged for committing 35 counts of fraud and Lay was indicted as he was charged for committing bank fraud, false statements, and conspiracy. Meanwhile the employees lost their job and also lost all of their pension. Enron Corporation massive financial fraud which led to multiple court hearings passage of Sarbanes –Oxley Act. This is to avoid to fallout such as Enron corporation.

Aftermath the bankruptcy Enron Corporation became Enron Creditors Recovery Corp (ECRC). That was the new name of Enron. United States Bankruptcy Court for the Southern District of New York approved Enron’s plan of reorganization and it was new board of directors decision to change the name. Enron Creditors Recovery Corp new mission was to reorganize and distribute assets of the "pre-bankruptcy" Enron for the benefit of creditors. In connection with Enron’s emergence from bankruptcy in November 2004, a new board of directors was appointed, and they adopted this mandate: obtain the highest value from the company's remaining assets and distribute the proceeds to the company's creditors. As part of its efforts, ECRC has successfully undertaken legal action to hold responsible the major financial institutions that it contends assisted the pre-bankruptcy Enron deceive the public. Those legal efforts have, to date, resulted in settlements of almost $2 billion in cash. Additionally, as part of these settlements, the defendants have agreed not to receive distributions upon claims against Enron worth approximately $1.38 billion. (Enron Creditor Recovery Corp.) REFLECTION ON THE UNETHICAL ISSUES (ENRON) The Enron scandal was a relatively popular corporate collapse in the United States where many savings and lending banks failed in the 1980s. Top officials at Enron have abused their power. A lot of information is altered for their own benefit. Employees and the general public are only used as tools to gain such interest. However, the events of the Enron scandal have made the United States aware of the need for significant reforms in accounting and corporate governance as well as taking seriously on the ethical quality of business culture there. Therefore, Enron will be a good lesson not only for the society of the United States but also for the other country. For example, we learn from Enron that an organization or company must adopt a healthy corporate culture. This is because Enron’s unhealthy corporate culture has been the cause of its collapse. Enron officials always want to be the best and when they face failures and losses, they cover it up for the sake of maintaning their reputation and not trying to improve the situation. Conflicts of interest were one of the reasons Enron collapsed so quickly. Conflicts of interest can be avoided by limiting and controlling the firms that provide services to the organization. This can also facilitate monitoring the status of capital received by the firm.

By the time of Enron’s collapse, the company had deceived many investors by manipulating its book for several years. Enron is an example of a company that has broad code of ethics but its ethical statements do not apply throughout its operation. The company needs to embody respect, integrity, communication, and excellence. Ethics also an important element in a company that wants to thrive. Therefore, the lesson we can learn is to monitor ethics more closely. This is to prevent abuse of power in any organization. Through this Enron collapse, we can be more vigilant even if unable to control company ethics directly, at least there is an intact mission to do the right thing. Enron is also an example to many company leaders implementing the right leadership and management qualities, as well as having a clear vision and mission. However, their vision is unrealistic and they often make a deal regardless of the cost. For them, continued profit and growth is enough. The various innovation made in unprofitable markets even they do not understand what they do. Their followers also lose personal value and responsibility to society. The next lesson is a organization has the right to implement anything. They will treat subordinates or the middle class according to their wishes. Sometimes the organization will behave well for long-term purposes. Therefore, it is up to the company to take how much risk with the cost it has to bear. As regular employees, we are only able to do our best according to the will of the organization. We can only hope that they are doing the right thing.

In short, top officials at Enron have failed to take responsibility and not adhere to ethics as top officials. They manipulated information while engaging in inconsistent treatment of internal and external constituencies. These leaders put their own interests above those of their employees and the public, and failed to exercise proper oversight or shoulder responsibility for ethical failings. Sadly, the followers were all too quick to follow their example. Reference Mimiys Ammelis (16 August 2017), Enron Corporation: Kisah Kebankrapan Terbesar Sebuah Empayar Di Amerika Syarikat. From https://iluminasi.com/bm/punca-kejatuhan-empayar-enroncorporation.html on 17 April 2021.

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