Running Head: Enron
Business Law I
July 23, 2011
Describe how Enron could have been structured differently:
I believe that Enron should have been structured in a way that there could have been more oversight and openness with respect to the officer’s action. The officers at Enron were left alone to create fictitious entities and move money around without anyone monitoring them.
Writing a code of conduct, supporting it at top levels and communicating it to employees is one area that should have been implemented.
Corporations should have a committee of independent non-executive directors on its Board of Directors who are responsibility for ensuring that systems are in place in the corporation to assure employee compliance with the Code of Ethics.
Measures they recommend should include staff training, evaluations of compliance systems, appropriate funding and staffing of the corporate ethics office, and effective protections to employees who "blow the whistle" on perceived actions contrary to the spirit and/or letter of the Code.
Allowing Arthur Andersen to both audit and consult with Enron created at least an appearance of a conflict of interest. These should have been separated. Subsequently, hiring Arthur Andersen employees as Enron employees who then managed the affairs of their former colleagues made this a real ethical conflict of interest. Auditing and consulting functions must be kept separate.
Discuss whether Enron’s officers acted within the scope of their authority:
The scope of corporate authority is limited by what is legal. Cross the line and do something illegal and you are no longer acting within the scope of corporate authority. Enron clearly crossed the line in many ways. The company covered up so many illegal activities from creating fake businesses to take the losses and shredded damaging records. Enron was allowed to borrow money covertly. Banks helped Enron exploit...