The Enron scandal is a textbook case of how a loose atmosphere toward ethical behavior can be damaging to a company, its employees, its shareholders and its customers. To simply say that Enron executives acted unethically is to understate the gross indecency of the entire sordid series of events. What is far too easy to ignore about the Enron case is that the company was held in such high esteem by analysts and investors even while it was engaging in such acts as lying to its shareholders and falsifying its accounting. In addition, Enron executives also took advantage of their knowledge of the true financial state of the company by engaging insider trading in order to make further profits off their criminal behavior.
The myriad of ethical oversights on the part of Enron’s executives might well have been held up as a shining example of how capitalism is supposed to work if they had not overextended themselves. What those responsible for the collapse at Enron did can be considered little more than giving in to the greed that is part of the grease that keeps the wheels of capitalism turning smoothly. The most significant aspect of the Enron debacle is that the lying and bribery and corruption associated with it is hardly notable. There is nothing particular about or specific to the Enron scandal that makes it stand out from any number of other corporate scandals. It was simply a case of very rich people wanting to become even richer and doing whatever it took to make that happen.
Those who ran Enron to the position of becoming one of the most admired companies in America are referred to in book and film as “the smartest guys in the room.” Apparently, they themselves thought the same thing. A culture of superiority permeated the Enron corporation, due in no small part to their success. But the reason for Enron’s decline also has to do with that culture. Although Enron famously had a code of ethics in place, they just as famously ignored it. Enron’s top priority was profitability. As long as even the illusion that money was being made held, nothing else mattered.
In order for Enron or any company to ever seriously apply a code of ethics to their business practices, something primal must take place. The culture of profits above all else must change. Companies must be made to understand there is a price to be paid for placing profit over ethical behavior. The problem, of course, is that a company is really nothing more than its human face. You cannot punish a company, which is merely an abstraction; though, admittedly, an abstraction that has been granted the same legal privileges as an individual. Before any substantive progress can be made toward changing the business culture in which every other factor takes a back seat to profits, a change will have to take place in the mindset of businessman. People like those who ran Enron into the ground must be made to genuinely fear the consequences of acting unethically, inappropriately or criminally. Even when appearing in the courtroom to face charges, very often the Enron execs at the center of the scandal showed little or no remorse nor little concern about prosecution. The only way to change that perception that they have nothing to fear is to give them something to fear. An ethics code must include specific and seriously punishment for those who violate it. Part of the overall problem of ethics violations by corporations is that they have very little concern about society outside their profit and loss statement. Part of the penalties for companies that are found guilty of engaging in unethical behavior should be to pay restitution not only to those whom they have violated, but society at large. These corporations must be shown that without consumers and clients, they would not exist. Social responsibility should be legally mandated as part of the code of ethics and violation of that code should result in punishment that actually has an effect. When a company is fined, it merely offsets that loss by raising prices or laying off workers. Instead of fining a company ten million dollars, it should be made to create and promote social initiatives that are equitable to that amount, creating jobs and bettering the general welfare.
