The business world is a battleground between good and evil, ethical and unethical, moral and immoral behavior. While some businesses have found it easy to increase profits by using unethical practices, many have lost everything by doing so and getting caught. Business ethics are not the same as the moral principles or habits that we learn from birth that help us determine what is right or wrong. They’re more practical and local; they’re rules of conduct recognized as appropriate to a particular class of human actions or a particular group or culture; they’re what “society thinks is right to do.” As such, they differ from company to company. Inside Enron, for example, what was determined “appropriate” was very different from moral behavior. For instance there is this natural gas company named Enron who were big and first founded in Houston, Texas in 1985. Enron was a great business and everything they did was perfectly fine and everyone were listening to their moral ethics. Once Enron promoted Andrew Fastov to CFO in 1998 every business aspect in the company changed. Since Enron was part of the stock market Andrew Fastow thought that Enron could be making more profit/revenue so he decided to “cook the books” which meant lie on the books about how much money Enron was making annually. He thought if he lied on the books Enron would increase value which also meant in shares in the stock market. This all came from what is known as business ethics; the stock market is a place where people buy stocks/shares of businesses in which case they are considered part ownership of any shares they bought from a particular company, they own only a small percentage of the business as well as gain a bit of income on the side. So Andrew Fastov drove Enron high in revenue and committed fraud to let more income come his way with the help of Arthur Andersen one of the big 5 accounting firms. Arthur Andersen was also another case that fell into the arms of unethical decisions and Enron helped take them down as well. Both of these companies worked to together so Enron would not be noticed by the S.E.C (U.S. Securities and Exchange Commission) and be in a lawsuit for falsely writing high profits on their books. At the same time Arthur Andersen was not following their morals which they knew this was a wrong decision and they should have declined but because of greed and money every decision was made without thinking. In reality Enron was in debt and losing money even though they were worth like a few billion. The only way that Enron was ever getting away with this scandal was paying auditors from Arthur Anderson to make Enron look better to the public; as a growing and upcoming business to consider working for. Arthur Anderson not only helped Enron with a better image to the business world but financially they wrongfully reported their books falsely to cover Enron of getting caught by the SEC. Eventually the SEC caught up with Enron an their unrightfully acts of stock shares increasing from $20 to $90.56 in just 3 years which is a valuation of $70 billion dollars. The SEC had to do an investigation on Enron and found out that they were committing one of the biggest frauds in the United States. Enron could easily have done fine without lying about their profits and asking for help to improve their company. Though they decided to take the risky route and achieve greater money in the least amount of time by committing fraud, disobeying the rules, and not sticking to their business ethics of following the rules to success without cheating. Cause of cheating Enron shut down in 2001 after being 16 years in service, and the CEO’s whose income were like millions of dollars each year, were fined a killer amount of money that each one of them went broke. Jeffery Skilling was one of the principal CEO’s who was sentenced to 24 years in prison but recently was reduced to only 14 years in prison. Sources say he will be released in 2017.
Not only did the SEC investigate Enron they also investigated Arthur Andersen because the auditors job is to find any fraud or errors in books. Once the SEC found dirt on Enron, Enron called the auditors. “The fired partner, David B. Duncan, called a meeting of auditors at the firm’s Houston office and ordered ”an expedited effort to destroy documents” on Oct. 23, the day after Enron disclosed that the S.E.C. had begun its inquiry, the firm said. The destruction apparently did not end until Mr. Duncan’s assistant sent an e-mail message to other secretaries on Nov. 9 that said ”stop the shredding,” the firm said. Andersen had received a subpoena from the S.E.C. the day before.” Now why couldn’t Andersen just give in to the SEC and surrender that they helped Enron instead of trying to shred all the evidence. Andersen could have been given a less painful punishment but since they messed up they paid the consequences. Andersen was one of the big 5 auditing firms in the world next to Deloitte, PricewaterhouseCoopers, Ernst and Young, and KPMG. Now 2017 Andersen is no longer in existence because after this great big scandal no other companies wanted to associate with a firm who were disloyal.
People say that business ethics and moral ethics are the same but they aren’t. Moral ethics are what you learn from your parents. While business ethics is more of a one way streak there we must follow it one way however the rules are of that certain company. There is no other way to follow it because of how your parents taught you differently that does not fall into place within the business world. If an employee does not want to follow the firm’s rules the outcome is usually to be fired. That is when employees start realizing how the world really works and whatever moral ethics they had are gone because of the business world.
Investopedia. “Enron Scandal: The Fall of a Wall Street Darling.” Investopedia, 23 Oct. 2017.
“Ethics vs Morals.” Ethics vs Morals – Difference and Comparison
Berenson, Alex. “S.E.C. Opens Investigation Into Enron.” The New York Times. The New York Times, 31 Oct. 2001.
Tribune, Chicago. “Ties to Enron Blinded Andersen.” Chicagotribune.com, 12 July 2008.