The Smartest Guys in the Room

The mark-to-market introduced by Jeffrey Skilling allowed Enron company to record profits in account books once new deals were stroked. The accounting method encouraged secrecy in profits earned. The profits generated did not necessarily reflect the displayed figure in the paperwork (1). The Securities and Exchange Commission approval of mark-to-market accounting methods and failure to scrutinize the actual benefits generated aided Enron in their manipulative business. Any financial analyst that tried to uncover Enron tricks was fired (2). Enron management also encouraged its employees to invest with the company and used their earnings to generate more profits. Enron accounting firm allowed Andrew Fastow to create shell companies that concealed Enron’s increasing debts. Fastow even created his own company and bought assets from Enron to maintain the reputation of Enron. Fastow approached US financial institutions to fund his company and Enron, and therefore Enron’s accounting book was in good shape despite the losses it incurred (3).

Enron’s culture of the survival of the fittest method rated workers’ performance and regularly expelled low performing employees. The culture forced employees to work eighteen hours a day to make the company huge profits and created an unhealthy competitive environment. The literature also triggered suicide (4). A whistleblower foretells a specified event bound to happen in the future and informs the concerned parties to take action (5). Sherron Watkins, the whistleblower, although she discovered the Enron’s fraud earlier, she expected Lay to do something to overcome the doom (6). 

Initially, the Skillings method allowed the stakeholders to make extra profits from successful projects through the discretion of finances generated (7). However, when Enron began to fail, the stakeholders were taken to courts, imprisoned, and heavily fined. Thousands of Enron employees lost their job and savings they had invested in the company (8). Lay was imprisoned, and he later died of heart stroke. Skilling was also jailed for twelve years. Skilling was released in 2019, and currently, he aspires to return to business (10). Even though money is essential in life, the desire for money can corrupt the soul and cause evil. Ethical motives should drive the pursuit of wealth (McLean and Elkind).(9)

Works Cited

McLean, Bethany, and Peter Elkind. YouTube, 2005, www.youtube.com/watch?v=BIwFO4_SWQQ.

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