Enron Scandal

Enron Scandal

Exposed in October of 2001, the Enron scandal led to the bankruptcy of an American energy company out of Houston, Texas named Enron Corporation. The scandal also led to the disbanding of one of the largest audit and accountancy partnerships in the world, Arthur Andersen. In this paper we will discuss the beginning and the end of the company, the warning signs of failure, the impact of violations, and the ethical issues within the scandal. We will also discuss the interaction of the Arthur Anderson and the ethical issues from his firms stand point on the scandal, as well as the ethical violation avoidance from a Christian perspective.

The Beginning and End

Enron was founded in 1985 by Kenneth Lay, and was one of the world’s largest energy companies before it went bankrupt in 2001. The foundation of Enron was through the merger of Houston Natural Gas and Internorth, two natural gas line pipeline companies. Enron owned over 37 thousand miles of intra- and interstate pipelines for transporting natural gas. In order to reach additional development, Enron pursued a different approach. They reached beyond just the pipeline business to become more involved. They became a financial trader and market maker in coal, steel, paper and pulp, electricity, water, and broadband fiber optic cable capacity. Enron embarked on becoming a corporation that not only owned but operated gas pipelines, electricity plants, paper factories, broadband assets, and water plants internationally.

Enron’s stock rose by 311 percent by 1998. By 1999 it increased by 56 percent and another 87 percent by the year 2000. By December 31, 2000, Enron’s stock was priced at $83.13. The annual revenue rose from about $9 billion to over $100 billion from 1995 to 2000. The market capital exceeded over $60 billion. And then by then end of November, 2001 shareholders lost nearly $11 billion when Enron's stock price, which hit a high of $90 per share in mid-2000, plummeted to less than...