Enron Ethics
The Enron/Arthur Andersen affair was perhaps the worst business and accounting scandal in the history of the United States. Indeed, Enron was engaging in a massive amount of malfeasance at all levels of the organization while Arthur Andersen, who was supposed to be an ethical and impartial third party, was at least partially in on the fraud. The circumstances were major as the power brokers for both firms paid dearly and many of the top Enron executives were convicted of crimes for their part in the fraud. Kenneth Lay only escaped sentencing because he died before the sentence could be announced. This report shall focus on some of the legal cases that happened in the aftermath of Enron including the obstruction of justice charges against Arthur Andersen and an appeal by Jeffrey Skilling, one of the convicted Enron executives. While the overall guilt of the parties involved were not in question, the legal cases that arose after the Enron scandal dust settled are still intriguing and are worth of review.
Analysis
One of the legal cases that shall be reviewed is the overturning of the obstruction of justice conviction that was levied against Arthur Andersen. As came to pass in May 2005, the United States Supreme Court came to the unanimous decision that the procedures used in the case were faulty. Chief Justice William Rehnquist was quite frank when he said “jury instructions at issue simply failed to convey the requisite consciousness of wrong-doing” (Mears). He went o to say that “it is striking how little culpability the instructions required” (Mears). At issue was that Andersen officials were convicted in 2002 of obstruction of justice. This centered on the alleged practice of Arthur Anderson shredding documents so as to avoid culpability and fault when it came to the Enron white collar crime spree. While the optics of those actions were terribly bad, the government made a fairly egregious error when it meted out jury instructions. To be specific, the attorneys for Andersen asserted that the jury was improperly instructed prior to deliberations. The crux of the supposed problem with the instructions was the definition of “corruptly persuading” as contained in the relevant statutes. It was presumed that this referred to “having an improper purpose … to subvert, undermine or impede.” The turning point of the appeal is whether the Andersen employees were acting with “criminal intent” (Mears). Ultimately, the Supreme Court of the United States decided that the prosecutors were negligent and incorrect in their interpretation and usage of the statute and thus the resulting conviction of the Andersen executives was improper. As such, the case was kicked back to the lower court for them to decide whether to retry the defendants, presumably with the proper statues and related instructions used (Mears).
The United States government prosecutors ran into a similar problem with Skilling. In a nutshell, Skilling was not convicted of causing Enron’s bankruptcy nor was he convicted of the Enron employees losing their retirement savings. However, he was sentenced as if he did both and the courts found fault in that. He was originally sentenced to twenty-four years in jail. However, that was reduced to fourteen years. Originally, Skilling was convicted in 2006 on a grand total of nineteen counts. Of those counts, twelve were for securities fraud and another was for insider trading. Under the federal sentencing guidelines, his offenses were for a total of thirty-six points. This would mean a sentence of 188 to 235 months, or 15-19 years. However, a federal judged added a four point “enhancement” due to the jeopardizing of the financial safety and soundness of the firm. This sharply spiked the prison time Skilling faced, raising it to 24 to 30 years in jail. Indeed, Skilling got more prison time than notorious crime boss Al Capone (Carney).
Skilling and his attorneys appeal the sentence and it eventually made it to the Fifth Circuit. Upon reaching that court, the sentence was overturned. Subsequent to that, the United States Supreme Court held that Skilling “did not violate a federal law making it a crime to deprive another person of ‘honest services'” (Carney). However, they decided not to overturn Skilling’s conviction and a federal appeals court later came to the conclusion that the confiction would stand. Ultimately, this led to a point being shaved off of the aforementioned total when it came to sentencing and this is what led to his sentence being reduced. Just as with the Arthur Andersen obstruction of justice case, the prosecutors and/or judges misread and/or misapplied the law as it was written and they got their hand slapped for it in both cases (Carney).
The other major issue with Skilling was the rather gross disparity between what happened to him sentence-wise and what happened to his alleged co-conspirators. As noted before, Kenneth Law was convicted but died before sentencing. Thus, his convictions were vacated. Skilling, even with the victorious appeal, ultimately served fourteen years. This stands in stark contrast to Chief Financial Officer Andrew Fastow only serving six years and Richard Causey (chief accountant) getting five years. The United States Supreme Court noted that Skilling basically got hosed and his only real “sin” as compared to his fellow co-conspirators is that he insisted on a jury trial while the others pled out while agreeing to testify against Skilling. Indeed, the Supreme Court decision, as authored by Justice Sotomayor, noted that the “once in a generation” gravity of the Enron situation basically made it impossible for Skilling to get a fair shake at trial (Carney).
As for the ethics involved, there are so many directions that could be traveled in but the author of this report will focus on only a few. As for Skilling, the author of this report does not believe for a minute that Skilling was an unknowing victim of what was going on at Enron. Even if he was not actively involved (which is a rather dubious thing to believe), he certainly knew about it going on. If he did not know what was going on, he should have. As for Arthur Andersen, their little “shred party” may not have met the legal standard for criminal intent and criminal convictions, but it should have. Unless they have a legitimate and legal reason to be shredding the documents that they were destroying, they had a duty to retain and keep the documents on hand. Indeed, there are many laws and regulations that require retention and storing of relevant documents and the accounting industry is full of such rules (Abelson).
As for the government itself, they made so many mistakes and it really makes them look inept and ineffectual. Beyond that, the laws that they did or tried to pass post-Enron were an overcorrection and actually end up punishing a lot of people and businesses that have never and would never engage in malfeasance. The jury instruction miscue was a clear gaffe and little mistakes like that need to be avoided at all costs. The people that prosecute these cases and instruct the jury need to know the rules and regulations to the letter. The reason why was proven by the vacating of the Arthur conviction because wrongly instructing the jury can lead to a conviction that will become null and void later on. As for the Skilling situation, this is another example of a judge or a prosecutor making a big mistake. Wanting to throw the book at the scandal of a generation (if not a century) is all well and good but the judges and the prosecutors have to operate within the law. If the law is deemed to be flawed, that is up for the legislature to update and fix. Judges and prosecutors are not allowed (nor should they be) to make things up as they go along and/or apply rules and statutes that do not apply to a given situation (Grissom). The latter is precisely what happened with Skilling and his sentence was reduced as a result. Further, the other co-conspirators getting such light sentences as compared to Skilling is a joke. It would have been interesting to see, however, what Lay would have gotten. However, the CFO (at a minimum) should have been hit harder, plea deal or not (Woolner).
Last up is the propensity for legislatures and other politicians trying to make an example or over-correct when it comes to creating or changing laws when scandals happen. Indeed, it would seem that tragic or substantial events give legislators an easy excuse to “drop the hammer” and more heavily regulate businesses and their behavior. Updating the statute so as to make what Skilling did the crime that it was (ruining the company and bankrupting people’s retirement accounts) would be fair. Updating the statute to refine or even broaden the rules regarding destruction of potential evidence (as Arthur Andersen did) would be a good idea. However, the creation of Sarbanes-Oxley was a huge over-reach and is not working as designed (Reutter). It increased the compliance costs for a great many companies that were operating completely fine and above-board under the prior system. As Justice Sotomayor suggested, the Enron mess was a perfect storm of white collar crime and the entire private sector, or at least most of it, should be punished for such a rare occurrence. If a single C-Level executive at Enron or a single power-broker with Arthur Andersen had said “enough is enough,” Enron would have been minimized or even prevented. Instead, both companies were destroyed because the people that knew what was going on wouldn’t do the right thing (SDSU).
Conclusion
The truth, at least according to the author of this report, is that Skilling, Fastow and Lay (had he lived) should all have served double-digit sentences — at a minimum. They quite literally ruined a company and ruined the retirement for a lot of people. They should be the ones to suffer for that — not the private sector. Instead, government regulators did a power-grab because that is what they like to do. It is the same reason the IRS tax code becomes more complex by the day.
References
Abelson, Floyd. ‘ENRON’s COLLAPSE: THE AUDITOR; Audit Papers Usually Held For Years, Accountants Say’. Nytimes.com. N.p., 2015. Web. 21 Sept. 2015.
Carney, John. ‘Why Jeff Skilling’s Jail Sentence Got Downsized’. CNBC. N.p., 2013. Web. 21 Sept. 2015.
Grissom, Brandi. ‘Errors In Judgment: The Consequences Of Prosecutorial Mistakes — The Texas Tribune’. The Texas Tribune. N.p., 2015. Web. 21 Sept. 2015.
Mears, Bill. ‘CNN.Com – Arthur Andersen Conviction Overturned – May 31, 2005’. Cnn.com. N.p., 2015. Web. 21 Sept. 2015.
Reutter, Mark. ‘News Bureau — ILLINOIS’. News.illinois.edu. N.p., 2015. Web. 21 Sept. 2015.
SDSU. Www-rohan.sdsu.edu. N.p., 2015. Web. 21 Sept. 2015.
Woolner, Ann. ‘Skilling Sentence Shows Enron Changed Everything: Ann Woolner – Bloomberg’. Bloomberg.com. N.p., 2015. Web. 21 Sept. 2015.
Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?
Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.
Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.
Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.
Computer science is a tough subject. Fortunately, our computer science experts are up to the match. No need to stress and have sleepless nights. Our academic writers will tackle all your computer science assignments and deliver them on time. Let us handle all your python, java, ruby, JavaScript, php , C+ assignments!
While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.
Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.
In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.
Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.
We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!
We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.
Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.
We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.
Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.
There is a very low likelihood that you won’t like the paper.
Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.
We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.
You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.
We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.
You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.
Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.
You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.
The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.
GET A PERFECT SCORE!!! 
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more