Enron Scandal Fitfalls

Introduction

In 2001, the nation was rocked by the collapse of Enron, a multibillion dollar corporation that employed thousands of people and had affiliations right up to and including The White House itself. Amid the financial chaos and destroyed lives and reputations the collapse left in its wake, questions arose concerning exactly how the catastrophe occurred, why it occurred, and who was involved. In this paper, these issues will be examined, as will the various ways that Enron's debacle heightened the awareness of corporate ethics in the United States.

An Overview of the Scandal

It is important, in starting, to understand how Enron rose to power and later imploded. Enron itself came to be born as the result of a 1985 merger of Houston Natural Gas and InterNorth-a Nebraska based gas pipeline company. From the very beginning, Enron had shown some cracks in its façade, as the company took on huge amounts of debt during its foundation and, as a result of deregulation of gas pipelines, no longer had exclusive right to its own pipelines (Thomas, 2002). In order to solve Enron's credit and revenue problems, CEO Kenneth Lay enlisted the help of Jeffrey Skilling-a young, sharp banking and finance consultant. Ultimately, Lay was so impressed that he tapped Skilling to join the ranks of Enron, which grew Enron into a major market middleman for energy that would eventually dominate the trading of energy contracts. Skilling also recruited the sharpest and most shrewd businesspeople he could find to join his newly formed team. Ultimately, Skilling got Enron involved in the trading of electrical futures and the creation of a Web-based commodities trading company that seemed to be an overnight success-Enron's stock value skyrocketed as well, increasing over 50% in one year (What Really Happened.com). After many years of seemingly huge successes, more cracks began to appear in the Enron crown. In the final analysis, the conspiracy of Lay, Skilling and others led to the...