The central point in the Enron debate can be simply stated by asking whether or not they acted ethically through their business practices. Executives used mark to market accounting practices along with deregulation across the nation in order to falsify books and to create an illusion of success to the general public. These practices and deregulations were not only accepted by their accounting firm, Arthur Anderson, but also legally established through government organisations such as the Securities and Exchange Commission (SEC). The central concern in the debate was whether Enron and their executives were aware of their unethical business practices and whether or not they in fact were unethical. However, it is easy to see the evidence pointing to Enron being a company who stood on an unethical ideology.
The Enron scandal lasted for over a decade and unfolded once the CEO, Jeff Skilling, resigned from his position “out of the blue”. The only way they were able to sustain their “high profits” was to sustain the illusion of an untouchable company. But once that illusion was tarnished, it was only a matter of time before things blew up and the power corporation fell. Analysts were willing to believe anything Enron told them and those who were sceptical were fired and paid off. The falsifying of their records allowed their stock prices to rise 50% in one year followed by 90% the next year. These increases allowed for maximised returns for all Enron executives and all who had invested in Enron.
We believe that the methods that Enron used in order to become successful were unethical as shown through dehumanisation, moral distance, and the banality of evil. Dehumanisation can easily be defined as treating humans as objects or machines and not as people. During the height of the success of Enron, the executives implemented a PRC system or a “rank and yank”. This system of reviews was given by colleagues on the overall performance of certain employees. If the review was not up to the standards of the company, they were fired on the spot. This sense of dehumanisation relates back to the thought ‘what is good for business’. They only cared about making a profit and not the people who made it for them. Moral distance is another aspect of the unethical ways of Enron. Moral distance suggests there is many people down the line are affected by a decision. For example, when Enron bought Pacific Gas and Electric Company, an electrical and natural gas company based in San Francisco, they had thoughts of the deregulation in California. While in this industry, Enron traders frequently made calls to the electrical companies and had them shut off power across regions in California. This enabled Enron to create larger profits due to a high demand but also caused harm to those civilians living in California at the time. These blackouts caused mayhem in California and affected a lot more people than Enron thought thus depicting the unethical theory of moral distance. The third concept that was shown through Enron was the banality of evil. This everyday evil is portrayed through all Enron employees from executives to lower ranks. No employee asked why the profits were so high and why the stock prices were skyrocketing. This banality of evil and greed for profits made everyone blindly follow orders from upper level management and make unethical decisions. These concepts illustrate the unethical behaviours of Enron.
Enron execs and traders main concern was money and profit, regardless of whether what was written on the paper was true. Business Ethics can be described as the ethical decisions, or lack thereof, that occur in a business setting and what is ethical and what is not. The Enron case is a perfect example of a company that built its corporation on unethical ideas and when exposed they collapsed. Enron’s practices were nothing short of unethical and deserved to be uncovered.
Brenna Coughlin and Andrew Barnes