Business Ethics Case 1

Case 1: Enron: What caused the ethical collapse.

1. The events that led Enron to the eventual collapse were that they could not hide billions in debt any longer, not following the code of ethics and the top leaders failed to show leadership withing the company to the employee's. Conspiracy, fraud and money laundering also had a major effect on the collapse of Enron by its employee's.

2. The top leadership at Enron undermined the values of the Code of Ethics by not following them. They did not respect themselves or the company because of the actions they were taking to make millions for themselves and drive the company into bankruptcy. They did not have integrity and work with customers and prospects openly as they lied about investments, prepays and books. They did not communicate with anyone besides the people that were hiding the books and making millions for themselves. And by not showing excellence as they did not follow the code of ethics and failed to raise the bar for the company.

3. The expectations regarding ethical decisions of Enron's leaders by employee's should have been to follow the code of ethics. They should have expected for everyone to follow the rules and not cheat, lie and steal as mentioned in the unspoken message of the company.

4. Enron’s corporate culture promoted unethical decisions and actions by letting the employee's believe they could handle great risk without any danger and failed to promote the respect and integrity values of the company. Enron's unspoken message was “make the numbers, make the numbers, make the numbers-if you steal, if you cheat, just dont get caught. If you do, beg for a second chance, and you'll get one.” By telling the employee's this they are promoting unethical behavior.

5. The investment banking community contributed to the ethical collapse of Enron by the use of prepays. Prepays were loans that Enron booked as operating cash flow. While booking these prepays Enron would secure new prepays to...