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Unethical behaviour at Enron
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“Ask why.” This was the slogan for the company Enron—a company riddled with corporate crime. The documentary Enron: The Smartest Guys in the Room describes the corrupt practices of this once seventh-largest company in the United States. Examining this film allowed me to “ask why” this company engaged in these criminal practices, and why corporate crime exists, in general. Currently, there is no real theory attempting to explain white collar crime, so instead, in this essay I will be looking at 5 different factors that I believe are helpful for understanding corporate crime including: corporate culture, the drive for profit, the structure of organizations, socialization and learning, as well as a motivated and persuasive leader. The first …show more content…
While this is a type of corporate culture, it plays a significant enough role in corporate crime that I’m going to touch on it individually. The goal of most every company is to make a profit, but when corporate profit is put above all else, it can easily lead to corporate crime. The phrases ‘profit over people’ and ‘money over morality’ come to mind here, especially when thinking about Enron. One example of Enron putting company profits above all else occurred during the California Energy Crisis. Enron traders learned that by manually shutting down power plants they could create artificial power shortages during California’s already occurring energy crisis. This would send energy prices sky rocketing. These traders would then bet on the price of energy rising, which it did, making them around 2 billion dollars. While those at Enron were fixated on the drive for profit, they were unconcerned with the consequences these outages had such as people getting stuck in elevators, fatal car crashes due to traffic light malfunctions, and deadly …show more content…
This describes the diffusion of responsibilities within companies and departmental isolation. Having certain departments within a company isolated, with their own specific responsibilities can allow for deniability in the face of wrongdoing, as well difficulties in pin-pointing blame. In the case of Enron, during the oil scandal, two traders were recklessly gambling company money. When this was making the company millions, Ken Lay, the CEO, was informed of the actions but let them continue. Once this led to the company losing money, Ken Lay was able to claim he was unware of the reckless nature and that he couldn’t be blamed for something he did not know
The Eron Scandal is thought to be a standout amongst the most famous inside American history. An Eron of occasions is considered by numerous students of history and market analysts alike to have been an informal outline for a contextual investigation on White Collar Crimes. ("Enron Scandal Summary - Finance | Laws.com," n.d.)White Collar Crime is characterized as peaceful, monetarily based criminal action ordinarily attempted inside of a setting in which its members hold propelled training as to business that is thought to be prestigious. ("Enron Scandal Summary - Finance | Laws.com," n.d.) The accompanying occurred amidst the Enron Scandal. Eron had great success in their early years. Though the period regulation inside of a business and corporate
White Collar crime is not a crime unto it self, but instead a criteria that has to be met in order for a crime to be considered as White- Collar Crime; (Blount, 2002) hence the reason why Corporate Crime is also considered as White- Collar Crime. At the same time, White Collar Crime and Corporate Crime can be seen as distinct criminological categories, however, in order to reveal this, this essay will firstly be exploring Sutherland's definition of white collar crime and the perplexity with this definition of white-collar crime. It will then be looking at the modification which had to take place with Sutherland's definition of white-collar crime in order to established a distinction between white-collar and corporate crime. Consequently, this essay will show in what ways and to what extent white collar crime and corporate crime are distinct criminological categories.
White Collar Crime by Edwin Sutherland, published in 1949, is a study in the theory of criminal behaviour. Sutherland (1949) states that the book is an attempt to reform the theory of criminal behaviour only, not to reform anything else. And although it may include implications for social reforms, it is not the objective of the book (Sutherland, 1949). Sutherland (1949) defines white collar crime as ‘a crime committed by a person of respectability and high social status in the course of his occupation.
the social world of Enron. The fact that they took the form they did and to such a pronounced degree are certainly troubling and perhaps surprising. What should not be surprising is the role such ritualization processes played in the development of this type of deviance, given recognition of their importance in social relationships and organizations.
The ENRON Scandal is thought to be a standout amongst the most infamous inside of American history; an ENRON outrage rundown of occasions is considered by numerous antiquarians and business analysts alike to have been an informal outline for a contextual investigation on White Collar Crime – White Collar Crime is characterized as peaceful, monetarily based criminal action ordinarily embraced inside of a setting in which its members hold propelled instruction with respect to occupation that is thought to be prestigious. The accompanying occurred amidst the ENRON Scandal:
Enron and their accounting firm Anderson Accounting brought what we know as “white collar crime” to the forefront. White-collar criminals are not known to be dirty criminals, because they use their heads to get what they want from society. White collar criminals do not use their muscle; instead they use their brain for mischievous way to manipulate people. These criminals are just as dangerous as the bank robbers and murderers in my opinion. In these times, even the most trusted people are being convicted of white-collar crimes, your neighbor, the banker you have trusted for ten plus years, the closest of family friends, no one can be ruled out. White-collar crimes can differ in the sort and magnitude of the crime. There are always new scams coming out every day that society falls victim
Cooper, Ryan. “The Great Recession never ended.” The Week - All you need to know about everything that matters, THE WEEK, 27 July 2017, theweek.com/articles/714423/great-recession-never-ended.
“To steal from a brother or sister is evil. To not steal from the institutions that are the pillars of the Pig Empire is equally immoral”, Abbie Hoffman said this. But what if the ‘Pig Empire’ that we steal from has a ripple effect on the rest of us and transforms something that should be ‘moral’ into an act of what is unquestionably wrong. In the 21st Century the number one rising crime have been white collar crimes. The Federal Bureau of Investigation, better known as the FBI, describe white- collar crimes as, “ illegal acts [involving] deceit, concealment, or violation of trust and which are not dependent upon the application or threat of physical force” (Wand 19). These crimes include embezzlement, tax evasion, credit card fraud, and bribery. These picture in the family of white- collar offenses and can dictate the future of business, investors, and individual citizens. The Federal Bureau of Investigation estimates that the United States of America loses $300 billion annually due to white- collar crimes. These are all targets of white- collar crimes. White collar crimes are the hardest cases to solve. White- collar crimes can take several years to solve and can take even more years to figure out that something is wrong but when they are captured the punishments can be costly. Punishments include: fines, home detention, and community confinement, paying the cost of prosecution, forfeitures, restitution, supervised release, and imprisonment. Although white- collar crimes do not display physical damage to our bodies, they neglect the law and showcase that even the most unsuspecting people can be selfish and commit the white- collar crime.
The fall and bankruptcy of Enron was a key time in the financial world. The fraud that was perpetuated at Enron impacted investors, employees, and the country as a whole. In order for the situation to reach the level that it did, other parties were knowledgable of the wrongdoings but did nothing to abate the issue. The business analysts took everything CEO Jeff Skilling said to be true and the investment banks involved with Enron masked loans as sales with buyback agreements. The fraud was caused mainly by key management’s tone on how to handle issues that arose relating to the firm’s financial position. By creating a high pressure work environment for employees, fixating on the company’s stock price, and prematurely booking profits Enron fostered an environment that practically encouraged unethical behavior and fraud.
White collar crime was a phrase that I was oblivious to, the meaning held no significance to me. Until one day I watched the movie The Big Short, a novel by the famous financial journalist Michael Lewis that was put into motion picture by Adam McKay. After watching this brilliant movie, thousands of questions arose in my head. I instantly became curious to learn more about this phrase, white collar crime. This is the moment when I decided to explore the question, why is white collared crime acceptable in some scenarios in the United States? The findings are unbelievable.
There are hundreds of different corporation crimes out there, that corporations are doing daily. However, the main corporation crime that will be focused on is that of the anti-trust offense. The anti-trust offense, is a deterrent to the competition to sure the far economic system with other corporations. Instead the anti-trust offense amongst the other corporations to sell goods at a reasonable price is a restriction. In theory this completive against each other, so that it ensures that a consumer is getting the best prices possible. Unfortunately, when a corporation uses this tactic it hurts the entire economic system. Furthermore, anti-trust acts are designed to promote and protect the competition, against the anti-trust offenses
Corporate fraud is a serious financial problem which attracted global attention of how banks enhancing their ability to corporate with those fraudulent enterprises. There are many instance in the world such Enron Corporation and WorldCom case. In China, there are increasing instances of corporate fraud emerged, where the capital market has been intensively impacted. About one-fifth of Chinese firms have been punished by China Securities Regulatory Commission (CSRC) for financial fraudulent behaviors. Corporate fraud is one category of financial fraud (Ngai et al, 2010). Wang et al. (2006) demonstrated the fraud as “a deliberate act that is contrary to law, rule, or policy with intent to obtain unauthorized financial benefit.”
White-collar crimes and organizational structure are related because white collar-crimes thrive in organizations that have weak structures. According to Price and Norris (2009), the elites who commit white collar-crimes usually exploit weaknesses in organizational structure and formulate rules and regulations that favor their crimes. Makansi (2010) examines case studies to prove that white-collar crime is dependent on organizational structure. For example, the financial crisis that Merchant Energy Business faced in 2001-2002 occurred due to the liberal Financial Accounting Board, which failed to provide a standard model of valuing natural gas and fuel. Moreover, a financial crisis that rocked the securitization market in 2008 was due to fraudulence in the pricing of securitization products. These examples ...
According to Sutherland, white-collar criminality is expressed in all corporations. In business, it is more frequent in the form of manipulation such as stock exchange, misrepresentation in the financial statements of the corporations, bribery of public officials, commercial bribery just to a few (Sutherland,1940). According to Pontell et al., 2014), white-collar criminals are respectable people who commit crime, where unlawful undertakings are hidden and concealed in organizational work by upstanding conduct. White-collar misconduct denotes to wrongdoings committed in an institution by those who indulge in deceitful doings, either by themselves or utilizing mediators, for monetary gain (Schoepfer et al.,
The definition of crime can be defined by Tappan (1947 in [Walsh 2012: 2] as “an international act in violation of the criminal law committed without defense or excuse, and penalized by the state”, thereby insinuating that a violation of the criminal law results in a prescribed punishment. Crime is a legal concept that is applicable to a widely defined category of devious behaviour and is largely associated with socio-economic class. Conspicuously, a shift from crimes to socially harmful acts has developed, incorporating a moral risk through which it fosters a deviant behaviour, of which white collar crime is exemplified. White-collar crimes are organizational in terms of coordinated and operational devious behaviour that is often neglected