Destroyed their personal and business reputations and their social standing.

They all risk criminaland civil prosecution that could lead to imprisonment and/or bankruptcy. (Board members weresimilarly negligent by failing to provide sufficient oversight and restraint to top managementexcesses, thereby further harming investor and public interests (Senate Subcommittee 2002).Individual and institutional investors lost millions of dollars because they were misinformedabout the firms financial performance reality through questionable accounting practices(Lorenzetti 2002). Employees were deceived about the firms actual financial condition anddeprived of the freedom to diversify their retirement portfolios; they had to stand by helplesslywhile their retirement savings evaporated at the same time that top managers cashed in on their lucrative stock options (Jacobius and Anand 2001). The government was also harmed becauseAmericas political tradition of chartering only corporations that serve the public good wasviolated by an utter lack of economic democratic protections from the massive publicstakeholder harms caused by aristocratic abuses of power that benefited select wealthy elite.The Enron scandal also harmed secondary and tertiary stakeholders. For example, Enron topmanagers pressured Arthur Andersen to certify maximum-risk, questionable accounting practicesin part to retain their lucrative consulting business and, by acceding to this pressure, Arthur Andersen won huge contracts in the short run but ultimately lost their professional credibility andclient base (Toffler and Reingold 2003). A parallel process occurred in the legal profession whenEnron managerial pressure on Vinson and Elkins to legally condone investor and employee fraud prevailed. Again, Citigroup, J.P. Morgan, and Merrill Lynch made over $200 million in feesfrom deals that helped Enron and other energy firms boost cash flow and hide debt, and, byfailing to exercise their own adequate due diligence, they multiplied the harm done to other stakeholders. The industrys reputation, furthermore, was tarnished by Enrons aggressivemarket leadership practices, the taxpaying public incurred additional shifting risk to eventuallycover bankruptcy collateral damage, and ultimately Americas stature as a model of democraticcapitalist practices was replaced by fear of the global export of Enron-like corporateirresponsibility and crony capitalism (Mitchell 2002; Sirgy 2002).These multiple stakeholder damages can be viewed as the result of serious lapses in the four dimensions of management integrity capacityprocess, judgment, development, and system.Understanding and correcting these lapses provides a structured way to address the moral rootsof current stakeholder remedies and reduce the likelihood of future Enrons. Process Integrity Capacity and Enron Process integrity capacity is the alignment of individual and collective moral awareness,deliberation, character, and conduct on a sustained basis so that reputational capital results. Theneed to address lapses in process integrity capacity is manifest by the routine fragmentation of managerial moral attention and behavior that arouses stakeholder concern about the moralhypocrisy of management practices (e.g., Enron top managers tout their public relations images

as responsible corporate citizens while defrauding investors and employees and secretly liningtheir own pockets with diverted funds) .While it is unlikely that Enron executives failed to perceive the relevant moral issues, it is clear that they were not sensitive to them. They appeared to be erroneously and overly confident of their initial distorted perceptions of morally acceptable business

conduct, and when challenged,as Fastow was regarding the appropriateness of his financial structures, retaliated againstaccusers and sought information in ways that confirmed what they already believed (Messick and Bazerman 1996). Since top management and board members ignored whistleblower feedback, they became morally blind, deaf, and mute, thereby diminishing their capacity for ethical awareness and eventual strategic responsivenessfor which they are held morallyaccountable (Cavanagh and Moberg 1999; Swartz and Watkins 2002). Moral deliberation, thesecond component of process integrity, is the capacity to engage in the critical andcomprehensive appraisal of causal factors and recognized moral options to arrive at a balancedand inclusive reasonable decision/resolution/policy that provides a standard for futuredeterminations (Petrick and Quinn 1997). The decision making style of the Skilling-FastowKopper circle demonstrated a tendency to suppress all but one aspect of a moral decision, i.e., itsshort term financial impact, and to exclude other parameters that might inhibit decisive action or constrain executive perks (Messick and Bazerman 1996). Enron managers and board members,who poorly analyzed and resolved moral conflicts of interest through self-centered policies alsoignored or trivialized the harm caused to other stakeholders. For their diminished capacity for balanced moral deliberation Enron managers are held morally accountable (Fusaro and Miller 2002; Swartz and Watkins 2002).Moral character, the third component of process integrity, is the individual and collectivecapacity to be ready to act ethically. The greed, dishonesty, arrogance, selfishness, cowardice,hypocrisy, disrespect, and injustice that characterized top Enron executives intentions disclosestheir culpable motives and the corrupting workplace culture they created (Sennett 1998). Theoveremphasis on personal financial gain at the expense of others destroyed any remnant of employee trust. The visionless accumulation of rapid wealth exposed the absence of leadershipwisdom and the deliberate obfuscation of financial structures to preclude a fair picture of thefinancial health of the firm eroded their characters; they de-humanized themselves and otherswith whom they interacted. The lack of the political virtue of citizenship is particularly damagingto internal and external character cultivation (Logsdon and Wood 2002).Moral conduct, the fourth component of process integrity, is the individual and collectivecarrying out of justifiable actions on a sustained basis. Managers that exhibit ethical conductdevelop a reputation for dependability and alignment of moral rhetoric and reality but theduplicitous exploitation of employee retirement savings exposed the cruel behavioral hypocrisyof top Enron executives (Cruver 2002). Judgment Integrity Capacity and Enron

Managers can attempt to evade full moral accountability by compartmentalizing and fragmentingtheir handling of management and ethics issues. One way to address this evasion is to enhance judgment integrity capacity , the capability of analyzing complete moral results, rules, character,and context in management practices (Petrick and Quinn 2000). The way Enron executivesmanage implicitly commits them to certain ethics theories, and just as simplistic, distortedmanagerial judgments produce poor results in

handling behavioral complexity, so also dosimplistic, distorted ethical judgments produce poor results in handling moral complexity (Paine1994; Petrick and Quinn 2000).For business leaders and their firms, exhibiting judgment integrity means being held accountablefor achieving good outcomes (results-oriented teleological ethics), by following the rightstandards (rule-oriented deontological ethics), while strengthening the motivation for excellence(character-oriented virtue ethics), and building an ethically supportive environment within andoutside the organization (context-oriented system development ethics). Learnings from the Enron case I do believe Enron will be the morality play of the new economy. It will teach executives and theAmerican public the most important ethics lessons of this decade. Among these lessons are:1.You make money in the new economy in the same ways you make money in the oldeconomy - by providing goods or services that have real value.2.Financial cleverness is no substitute for a good corporate strategy.3.The arrogance of corporate executives who claim they are the best and the brightest, "themost innovative," and who present themselves as superstars should be a "red flag" for investors, directors and the public.4.Executives who are paid too much can think they are above the rules and can be temptedto cut ethical corners to retain their wealth and perquisites.5.Government regulations and rules need to be updated for the new economy, not relaxedand eliminated

graduate school. Enron encouraged and rewarded innovation. However, theoverwhelming drive for short-term personalwealth accumulation was the negative ethic. Managers were encouraged topursue this goal with, if necessary, guile and deceit.Enron claimed to generate profits and revenue from deals with SPES thatwere actually limited partnerships that Enron controlled. Enron was claimingbillions in profit when it was actually losing money. Enron was using thesepartnerships to sell to itself these contracts back and forth recording revenueeach time to hide losses and debt that it suffered by not reporting them on itsfinancial statements. It was shuffling much of its debt obligations into offshorepartnerships. Lessons from the Enron Case 1. You make money by providing real goods and services i.e. real value formoney2.Financial cleverness is no substitute for a good corporate strategy3.Executives who are paid too much can think they are above the rulesand can be tempted to cut ethical corners to preserve their wealth andperquisites4.Government regulations and rules need to be updated not relaxed andeliminated. 5. Conflict of interest: Enron claimed to generate profits and revenue fromdeals with SPES that were actually limited partnerships that Enroncontrolled. 6. Creation of false confidence i.e. Enron covered up the debt under theseparate accounting financial statements of the SPEs that showedgrowth of business: growth of asset value: rise in Enrons share price:rise to shareholders income. So long as the share price does not fall, thegrowth of business can be tremendous, but such cover-up sows the seed 7

of hidden disaster as the asset value of business depends primarily onthe investors . 7. Collusion: the auditing firm was a partner, internal and external auditorfailing to provide complete disclosure, and unfair financial reporting.8.Transparency in reporting is not an objective 8

References 1. The Responsibility and Accountability of CEOs: The Last Interview withKen Lay Journal of Business Ethics _ Springer 2010 DOI 10.1007/s10551-010-0675-y O. C. Ferrell Linda Ferrell 2. The critical role of ethics: recent history has shown that when individualethics are compromised, corporate ethics fail and financial disaster isnot far behind by Marianne M. Jenningshttp://findarticles.com/p/articles/mi_m4153/is_6_60/ai_111737942 3. Enron And Arthur Andersen: The Case Of The Crooked E And The FallenA Gary M. Cunningham and Jean E. Harris Global Perspectives on Accounting Education Volume 3, 2006, 27-48

Companys Profile Enron is a USA based Company formed in 1985 by Kenneth Lay from a merger of Houston Natural Gas Company and InterNorth Inc., It was the first nationwide natural gas pipeline network in Houston, Texas. Enron Corp ranked 7th on the Fortune 500 list of Companies. Enron employed approximately 22,000 employees. It was one of the worlds leading electricity, natural gas, pulp, paper, and communications companies, with claimed revenues of nearly $101 billion in 2000. Enron was named "Americas Most Innovative Company" for six consecutive years.

What Enron Did? Enron was an American company located in Houston, Texas. Enron did a lot of things to make profit, but the main way it made ridicules amounts of profit was by providing different types of energy, such as electricity and natural gas. Other services that Enron provided were communications, and pulp and paper companies. Enron was the leading provider for these services in 2001.

Who was involved? Enron founder, Kenneth Lay Former CEO, Jeffery Skilling Founder broadband unit chief financial officer, Kevin Howard Enron employees