Enron is a white-collar crime scandal. In 1985, Houston Natural Gas and InterNorth merged to form the company. It is headquartered in Houston, Texas. Kenneth Lay became the chief executive officer (CEO) of Eron. Jeffrey Skilling was appointed by Lay as head of Enron Finance Corporation in 1990. In one of the most significant corporate fraud cases ever, Enron's debt was purposely concealed from stockholders through deceptive accounting, and the corporation continued to acquire and sell stock in other companies. In order to conceal its growing debt from stockholders, Enron engaged in fraudulent accounting and buying and selling stock constantly The main purpose of Enron's stock transactions was to enrich its executives, rather than to enrich the company. When Enron announced it had overstated its value by $1.2 billion in October 2001. the fraud was discovered. In the wake of Enron's bankruptcy, many of its officials were charged with multiple frauds, including securities fraud. Investors and employees suffered tremendous losses, and many lost everything, including their life savings. In 1992, the Securities and Exchange Commission (SEC) granted Enron's mark-to-market (MTM) accounting method official approval, which Skilling helped to implement. MTM indicates the fair value of accounts whose values can change over time, such as assets and liabilities (Segal, T., 2022). It is a legitimate and widely used method of estimating an institution's or company's market value. In some cases, however, MTM can be manipulated, since it is not based on "real" costs, but on fair values, which is more difficult to quantify (Segal. T., 2022). Using Mr. Skilling's accounting method, Enron was able to disguise its actual debts and losses despite incurring losses. Financial crimes are committed under this scheme. I believe that the CEOs and other corporate officers involved were justly held criminally responsible. Upon being convicted of 19 counts in Enron's 2001 collapse, Skilling served 12 years in prison. The Enron scandal led to the conviction of 21 people, and Arthur Andersen went out of business after being convicted of obstruction of justice. Despite the Supreme Court's decision to overturn the conviction later, 85,000 Andersen employees lost their jobs as a result. I believe that businesses should have a corporate responsibility to conduct themselves in an ethical matter. Despite having the ethical responsibility to conduct business in a matter that is beneficial to all the stakeholders, the government has the policing responsibility to ensure corporate responsibility. The government is elected by the people for the benefit of the people. Businesses should work for the stakeholders, but government works for the greater good of society. White-collar crime is not a victimless crime but a crime against society, that is why it is the government's responsibility to police corporations for the greater good of everyone.
References:
Kubasek, N. K., Browne, M. N., Herron, D. J., Dhooge, L. J., & Barkacs, L. L. (2021). Dynamic Business Law: The essentials. McGraw-Hill Education.
Segal, T. (2022, February 8). Enron scandal: The fall of a wall street darling. Investopedia. Retrieved March 22, 2022, from