Business Ethics
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Business Ethics
As everyone knows Enron Corporation and WorldCom was a couple of the most profitable and powerful companies that were traded on the big boards in the early 2000s, or so many people thought they were. This research paper will try an attempt to reveal how Enron Corporation and WorldCom met their demises. This paper will identify major factors that led to the dissolution of Enron Corporation and WorldCom. This paper will also try to explain the ethical violations in Enron Corporation and WorldComs accounting practices. The role of business ethics in strategic financial planning will also be described in this paper.
Case of Enron
By June 18, 2002 accounting firm Arthur Andersen was already considered guilty by the people who has invested in or worked for Enron (Thomas, 2002). A jury from Houston, TX found Arthur Andersen culpable of hindering justice. Investors of Enron lost more than $60 billion; responsible for the auditing of Enrons books was Arthur Andersen. An employee within Arthur Andersen might have been directed to shred multiple Enron documents before investigators had a chance to view them. Let alone the destruction of key documents and information Arthur Andersen also modified a commentary that was significant of Enrons release. A lawyer at Arthur Andersens Chicago based office named Nancy Temple gave instructions to the account supervisor, David Duncan, to remove her name from a memo that disagreed with a $1 billion loss to Enron as non-recurring (Thomas, 2002). Andrew Weismann the prosecutor on this case, said, this is an excellent example of Arthur Andersen purifying the records so the Securities and Exchange Commission (SEC) would have a deficient amount of evidence. Due to these proceedings, the government was capable to accumulate the support of the public into the reason they were looking at this 89 year old organization with an immaculate reputation. In this debacle with Enron there were so many major factors that took place that led to their dissolution.
Case of WorldCom
Bernie Ebbers, CEO of WorldCom, was inducted into the Mississippi Business Hall of Fame in 1995 (Rawlings, 2010). In 2000 with a personal net worth estimated over $1 billion, Bernie Ebbers and WorldCom was rapidly growing. In 2002 investigators showed WorldCom executed and had an accounting fraud scam totaling $11 billion in misstatements (Rawlings, 2010). The accusations pressed upon Bernie Ebbers were for taking personal loans from the company totaling $366 million. The stock of WorldCom was at $64 per share but when everything was said and done the stock dropped to a little over $1 per share. This cost WorldCom stockholders more than $100 billion in losses (Rawlings, 2010). The ethical violations displayed by Enron, WorldCom, and their accounting firms aided