Fraudulent manipulations of big corporations result in significant damage to their workers and stockholders. One of the most prominent examples of such acts is the Enron scandal related to false financial reporting (Petra & Spieler, 2020). The largest energy company started to engage in deceitful practices by removing a substantial amount of debt off its balance using special purpose entities that led to overstating Enron’s stock value by $1 billion (Petra & Spieler, 2020). However, when these fraudulent operations became publicized, the company’s price per share dropped to less than a dollar, causing dramatic losses for stockholders, many of whom were Enron employees. Furthermore, the company had to declare bankruptcy, and 4,000 workers lost their jobs and retirement savings (Petra & Spieler, 2020). Most of the executives involved in this crime were imprisoned or committed suicide.
The response of the U.S. justice system was immediate in the Enron scandal, resulting in a series of arrests and lawsuits. For instance, the firm’s president Jeff Skilling was arrested and sentenced by a federal court to 24-year imprisonment, but he was released twelve years earlier (Petra & Spieler, 2020). However, the company’s chief financial officer Andrew Fastow went to prison only for one year due to pleading guilty (Petra & Spieler, 2020). Enron’s chairman and CEO, Ken Lay, was also charged at federal court but died from myocardial infarction soon after his conviction (Petra & Spieler, 2020). I consider these punishments were legally fair, but they could not fix financial and emotional damage to employees. Moreover, a firm’s destroyed reputation affects workers more than its leaders. Although the government oversight would simplify the control and prevent fraudulent acts, owners of corporations must follow moral and ethical standards in the business without external monitoring. Still, I think that regular assessment of companies by federal agencies is needed to protect citizens’ interests.
Reference
Petra, S., & Spieler, A. C. (2020). Accounting scandals: Enron, Worldcom, and Global Crossing. In H. K. Baker, L. Purda-Heeler, & S. Saadi (Eds.), Corporate fraud exposed (pp. 343–360). Emerald Publishing Limited.