Enron Scandal: Corporate Fraud, Accountability, and the Need for Stronger Regulation

Overview of the Company and Summary of the Crime

The chosen company is Enron, and the crime committed by the company’s executives, particularly by Enron’s former CFO Andy Fastow, was related to fraudulent accounting activities and the manipulation of financial statements. The CFOs were accused of hiding debts and engaging in insider trading; as a result, the company went into bankruptcy in the early 2000s (Banham, 2019). This led many investors and employees to suffer financial losses because employees kept their retirement savings in the company’s stock (Banham, 2019).

Accountability of CEOs and Corporate Officers

Andy Fastow was sentenced to six years in prison and a fine, but he served his sentence some time ago. Currently, he is giving lectures at universities and companies. On the one hand, he served his sentence according to the law and was held accountable for his wrongdoings. At the same time, his actions affected thousands of people, many of whom lost all of their savings. In my opinion, the sentence he served did not entirely correlate with the damage he caused.

Similar white-collar crimes can result in severe consequences across various spheres. Thus, court decisions should be stricter (Kubasek et al., 2020). On the other hand, other participants who made the fraud possible were not held accountable to the same degree (Banham, 2019). I believe that in a crime of this magnitude, all participants should be held accountable to some extent.

Ethical Self-Regulation vs. Government Oversight in Business

In my opinion, a business cannot regulate itself to act ethically without governmental control. The primary purpose of any business is to generate profit. Without regulations, the market will regulate itself only based on this purpose. Ethical operation often comes at the cost of financial losses, which most businesses would not agree to voluntarily. This is why setting boundaries and rules is necessary for society to be protected from the harm that businesses’ actions can cause.

References

Banham, R. (2019). FIRST PERSON: Andy Fastow and Me: Enron’s former CFO and convicted felon, Andrew Fastow, talks with the CFO writer who first chronicled his “groundbreaking” manipulation of accounting rules. CFO, The Magazine for Senior Financial Executives, 35(2).

Kubasek, N. K., Browne, M. N., Dhooge, L. J., Herron, D.J. & Barkacs, L. L. (2020). Dynamic Business Law (5th ed.) McGraw-Hill Education.