The Adelphia Communications Scandal
John Rigas started Adelphia Communcations in 1952 with the help of two partners, but soon bought it out. The company was taken public in 1986 and as a result would have to abide by the regulations of the SEC. By the early 2000s, Adelphia was one of the top cable companies in the United States. This was the peak of a corporation that would begin a downward spiral over the first half of 2002 as a result of fraudulent use of the company’s assets at its’ shareholders expense.
...effery Skilling former Chief Executive Officer and Chief Operating Officer were both charged with bank fraud, securities fraud, wire fraud and money laundering. To date there have been over forty arrests with eighteen guilty pleas and four jury convictions along with trials still pending(prorate).
Jamie Dimon once said that “doing first class business in a first class way” has led to all of his success at J.P. Morgan because building a business does not only mean to build on profits, but also to make sure business is being done in an ethical way. Enron Corporation, once a great accounting firm, fell under its own weight as it was reaching for greatness. Former CEO Kenneth Lay, made a commitment to business ethics based on communication, integrity, respect, and excellence. However, a once successful American energy, commodities, and financial risk service company made questionable financial practices that ultimately led to their downfall. This essay will focus in the details of ENRON Scandal, how the corporate culture influenced the employees, enactment of the Sarbanes Oxley Act of 2002, the impact Enron has made to the current markets, and ultimately leading to the question whether another Enron scandal can occur again in the future.
An Evaluation of Ethics and the Ethical Culture of Enron.
This article provides a brief background on the event leading to the demise of Enron. Additionally, this paper will discuss the cultural elements of Enron and their relationship to unethical behavior and its effects on stakeholders. Lastly, this paper offers an analysis of ethic theory and its application to the Enron Dilemma.
Due to such lack of monitoring, management continued to be unaware of such transactions that continued to impact the company negatively. This provided the Rigas family many opportunities to override controls since the lack of corporate governance enabled the decisions to be made by Rigas family without oversight. For example, the article “Adelphia Officials are Arrested, Charged with ‘Massive’ Fraud” discuses how Timothy Rigas had to limit himself to $1 million a month of compensation that was withdrawn from the company for personal use. All decisions were continuously made by such members of the family, in which case for Adelphia, was the team of management. With the lack of controls creating opportunity, they were free to do what they wished- which is something they took incredible advantage
The first ethical dilemma faced by Adelphia scandal is massive financial statements. In order to meet the Wall Street expectations, John’s family hided $2.3 billion in debt, which could pretend Adelphia looks like the
Business Ethics are a set of moral principles that are established by corporations
for rules and regulations. Ethics is the discipline dealing with what is good and bad and with a
moral duty and obligations. Such as employee theft and fraud, dishonesty like Bernard Ebbers a
chief executive for World com and the Enron Corporation scandal, Ethics are moral duties that
many people use every day, ethics are the rules or standards principal of conduct how people live
life and make decisions.
According to Business Ethics Definition, business policies and practices regarding potentially controversial issues, such as corporate governance, insider trading, bribery, discrimination, corporate social responsibility and fiduciary responsibilities.
Ethical behavior, in a general sense, is a definition of moral behavior in regards to lawfulness, societal standards, and things of that nature. In the business world, ethics commonly refer to acceptable and unacceptable business practices within the workplace, and all other related environments. The acceptance of colleges regardless of ethnicity, gender, and beliefs, as well as truthfulness and honesty in relation to finances within the company are examples of ideal ethical business conducts. Unethical business behavior would include manipulating procedures based on bias or discrimination, engaging in activities that promote political gain, as well as blatant fabrication of monetary factors within the company and “can affect organizational performance and is costly to employers, employees, shareholders, and other organizational stakeholders” (Cox 263). When a corporation practices proper ethics, it is representing not only itself in a positive manner, but its partners, shareholders, and clients as well. On the other hand, when an organization partakes in unethical activities, all parties are negatively affected. The collapse of Enron is a major case of unethical conduct in the corporate world, because the circumstances surrounding the firm’s chaotic plunge where so scandalous that it left “creditors wrangling over Enron's skeletal remains” (Helyar) long after the company had seen its demise. There are numerous instances to be mentioned, including deliberate failure to properly report fiscal losses, insider trading, and overall relentlessness. The inclusive purpose of this paper is to further explore the underlining factors that contributed to the downfall of the once powerful Enron, and how a new way of approaching business ethi...
Applying the idea of moral goodness with business, however, is often a contradictory concept in lieu of the malicious and often scandalous behavior that businesses are notoriously publicized with. Enron, an energy company based out of Houston, Texas, is perhaps the most popular of scandals of the century thus far. Their name is synonymous with corporate fraud and corruption after the allegations of accounting fraud hit the headlines in 2001. The scandal was also considered a landmark case in the field of business fraud and brought into question the accounting practices of many corporations throughout the US (Raslan, 2009). Under this shroud of deceptive business practices and activities, applying the idea of moral goodness with business is a difficult sell to readers.
Ethics policies are implemented in almost all businesses. Companies search for candidates that will be moral in their actions so they can ensure long-term financial success. Throughout history we have seen businesses fall due to unethical behavior. In recent years the business Enron Corporation is best known for the scandal that led to the bankruptcy of a company with more than 60 billion dollars in assets. We will examine the circumstances that led to the downfall of Enron, how the scandal was realized, as well as the outcome of one of the largest bankruptcies in American history; a case that exemplifies unethical professional behavior.