INTRODUCTION:

The fortunes of Houston-based Enron Corporation, which went from having $65
billion in assets to going bankrupt in less than a month, are chronicled. The
stories generally focus on the people who built what was a house of cards called
Enron, knowing what they were doing was mostly smoke and mirrors, often
illegal, and often at the expense of the working class, but still proceeded out of
pride, arrogance and/or greed. The film focuses primarily on the two at the top
who were responsible for setting the corporate culture for all those under them:
Chair and CEO Kenneth lay and COO Jeff Skilling. While many of the top
executive were able to liquidate the majority of their shares from the company
before the plunge, the general investor and the employees, who sunk much if
not all of their 401s into the company, were the ones who ultimately got burned,
let alone those, such as California utility users and payers, who were negatively
affected along the way. The film also details others who were complicit to the
goings-on at Enron, such as the banks and Enron's auditor, Arthur Andersen
SYNOPSIS OF THE DOCUMENTARY:
Since found in 1985 as an interstate pipeline company, Enron had been a power
supplier to utilities. Its business began through the merger of Houston Natural
Gas and Omaha-based InterNorth. In the following 20 years, Ernon grew quickly
and became the largest energy trader in the world. By the end of the twenty
century, Enron had many honorable titles, such as one of the worlds leading
electricity, natural gas, and communications companies, the world most
admired corporations, and so on.
In the following years, with the increase of competition, Enron decided to use
diversification and international investment to keep its market position. Actually,
these activities brought Enron an unexpected large amount of losses rather than
profits. In 1999, after a foray into fiber optics and the broadband market, which
was a wrong decision again, Enron suffered too many substantial losses and
began bleeding quickly. However, Enron had never declared any information
about its losses until October 2001. Instead, in these years, Enron achieved a
phenomenal bottom-line through overstating revenues and hiding liabilities.
Besides manipulated the financial statements, Enron never mentioned the risks
which it should disclose to its investors. On the contrary, the executives of Enron
disclosed a great earnings forecast through the media and encouraged investors
to purchase Enrons stocks. They also suggested their employees invest their
pensions in Enrons stock or stock options. Arthur Andersen, the audit company
for Enron, helped Enron hide these frauds for five years. Every time when
analysts or Enrons employees expressed their doubts about Enrons financial
condition, Enron would try to keep them quiet and fired them later. Meanwhile,

top executive embezzled. The executives also drove up the stock price and put a
large amount of money into their own pockets through trading stocks. Because of
those frauds, from 1998 to 2001, the stock price peaked at $90 US. By December
2000, Enrons shares were selling for $85 each, its employees had their 401(k)s
heavily invested in Enron Stock, and the company had a matching program in
which it contribute additionally shares of stock to savings and retirement plans
when employees chose to fund them with Enron stock. Therefore, both investors
and employees suffered heavily from this disaster when Enron collapsed.
Problems began erupting in 2001. Jeffrey Skilling, the CEO, departed in August of
2001. Then in October 2001, Enron reported a loss of $618 million. Following
that, Chief financial officer Andrew Fastow was replaced, and the Securities and
Exchange Commission (SEC) began investigating the company. After about one
month, in late November, the SEC found off-the-books entities and overstated
revenues, and then the companys stock was down to less than $1 US. Finally,
on December 2, 2001, Enron filed for bankruptcy protection. Investors lost
billions of dollars.
Five barriers to an ethical Organisation
Ill concieved goals: In this context , the company in order to increase
competitiveness in its employees it has introduced ranking system wherein each
and every employee can evaluate the other employees and the last 15% were
fired for poor performance. But it had a negative effect , wherein employees
underrank there colleagues just to be on the safe side , so that they dont get
fired and this was because of ill conceived goals.
Motivating Blindness: Due to motivated blindness the top management( the
whole organisation) overlook the unethical behaviour of Jefferson i.e introduction
of mark to market accounting system which projected unearned profits. This
gives Enron the ability to subjectively give the appearance of being a profitable
company even if it isn't.The organisation remain ignorant to his unethical
behaviour for its own interest of not getting revealed as a company in debt and
to be perceived as a profitable company.
Indirect Blindness:

The slippery slope: Identifying the entities that can share in the blame of enron
collapse results in a long list that includes:
1) Enrons top management and board did not stop transactions that they did not
understand(and maybe did not know about).
2) Investments banks and commercial banks, for not identifying the pitfalls for
enron associated with complexity and large amounts of leverage.

3) A law firm that seemed not to keep the enron board informed of all conflict of
interest situations.
4) Rating agencies and security analysts that did not insist on better information.
5) The auditors seemed to be too permissive.
6) The CFO initiated many of the transactions that can be criticized.
7) Investors who paid too much for the stock.
8) The designers of the accounting rules that facilitates the hiding of the debt.