As many of you are already familiarize with Enron corporation, I will not spend too much time introducing this blog. The fall of Enron is considered to be the largest bankruptcy in American economic history. Swift collapse revealed a trail of enormous efforts to hide losses and a number of fraudulent activities*. The link below is the short scene from the video “The Smartest Guy in the Room”, and it describes how Enron used Californian power grid to cause artificial demand for electricity and sell it back to desperate consumers under astronomical price. In addition, the video reveals audio transcripts of conversation between Enron’s traders that will undoubtably raise ethical questions among listeners.

 * While watching this video keep in mind a series of legislative reforms enacted in the period 1978-1992, that liberated utilities (including electricity) to be bought and re-sold at whatever prices traders saw fit. Although some actions in the video might look like fraudulent activities, in the eyes of the Supreme Court were classified only as unethical business conduct.    



4 responses »

  1. brookeparker16 says:

    Last night I got into a discussion with a friend regarding Enron that led to how greed in major corporations is effecting our generation. I find it upsetting that the unethical business practices helped lead to a complete economic collapse and now our generation is paying for it. How many people were told that if they studied hard and received a good education they would be successful? How many of these same people do not have jobs? Is it fair that we are not getting jobs because of the mistakes made by others? I can say that until recently I did not really question this, but rather, I just accepted that it was life.

  2. scoutberger says:

    Marko and I studied Enron briefly in our Business Strategy class and I was absolutely astounded by the details and the deception of the Enron scandal. The video “The Smartest Guy in the Room” and the brief research I have done about Enron shows a significant amount of unethical people and situations. I think studying Enron will be extremely informative for our class and contribute to our discussion about ethics and values. Personally I am most interested in studying the CFO of Enron, Andrew Fastow. Fastow was recently released from jail in mid December. I turn to everyone in our class and ask a question: “Do you believe that Fastow’s penalty and jail time (of 6 years) is appropriate? Should he have received more time or should he have had received less time?”

    In my personal opinion, I do not believe that Fastow received enough time in jail. While the collapse of Enron occurred because of many people and unethical situations, Fastow played a large role in its demise. Enron affected many people, jobs were lost, the company fell apart and many of these circumstances were at the hand of the CFO. Fastow was indicted on 78 counts such as fraud, money laundering, and conspiracy. What intrigues me is that originally Fastow had a 10 year sentence but because he played his role in court so well, prosecutors lobbied for an even shorter sentence of 6 years. Fastow was able to get away with his fraud for as long as he did because of his “manipulative” performance throughout his years at Enron. In my personal opinion, Fastow put on another great performance in the court room; however, a performance should not determine one’s sentence.

  3. marko987 says:

    I absolutely agree that Fastow’s penalty of 6 years is definately not appropriate one. He should have spend way more jail time. It’s almost ironic how Fastow spent a least amount of time in jail, especially because he was viewed as the scapegoat at first. In 2001, the founder Kenneth Lay and CEO Jeffrey Skilling were playing the blame game and Fastow seemed like the perfect person to place the blame on. So, they publicaly crucified him in hope he would be the only one to go to jail. But people knew that Fastow is not the only one responsible.Skilling got 24 years sentence and Kenny-boy would have 25-30, but he decided it would be better to die first.

  4. pbm043 says:

    I found this video particularly interesting because it clearly shows the malicious intentions of the Enron employees from the very beginning of their careers as traders. The video makes it clear as day that these were people who knew full-well that what they were doing was completely unethical and bordering on illegal, and yet they were laughing all the way to the bank. I think Scout hit on an excellent question that would be worth some discussion in class. White collar criminals are often shown to receive sentences of minimal time and to serve them in “Club Fed” status facilities, and yet the crimes they commit effect potentially enormous populations. If it were up to me, I would have given out a much harsher sentence to a man like Fastow. People such as those who were at the top level of Enron and other similar companies are some of the wealthiest and most powerful people in the world, and it is absolutely ridiculous that they are given slaps on the wrist for the massive amounts of damage they are responsible for.

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