Importance of Enron’s Actions in United States History
In 1985, Kenneth Lay merged the natural gas companies Houston Natural Gas and InterNorth, creating Enron. Enron Corporations bankruptcy case is famous for being the largest corporate bankruptcy cases in United States history. In the 1990’s the company’s stock was expanding at a steady rate; this rate mimicked the flow of economy at that time. But, in 1999, the company saw humongous growths that continued to hold all the way until the end of the year 2000. The company increased by 56% in 1999 and then by 87% in the year 2000. Enron Corporation was able to give the appearance of massive economic gains year after year to its shareholders. This perceived gain was mainly due to the complexity of their financial statements. This misleading came from company executives purposely misleading the company’s shareholders. By doing this, they were able to get the shareholders to continuously invest their money year after year.
This increase in funds led to the company claiming enormous financial gains every quarter. All of this trickery lead to the misleading info that their books perceived. At its peak, in mid-2000, Enron Corporation’s stock was valued at more than $90 per share. But, by the end of 2001, Enron Corporation filed for bankruptcy. The filing for bankruptcy was due to them having their fraudulent accounting techniques exposed. Kant’s moral theory is narrowly based off the idea of making decisions. Digging deeper, the theory is strung on the basis of how morally correct or incorrect that decision is, regardless of the consequences of the action. The main principle behind this theory is that we are not in direct control of the consequences of our actions, therefor we cannot base morality on something that is not within our control. Because of this, Kant believes that the foundation of morality is acting upon reason. He believes that the goodwill of our decision making is solely based on if we can control our reason for the decisions we are making. The theory by Kant claims that one must not perform an act, if one cannot tell everyone to act in the same manner as us.
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Adding to the previous definition, Kant’s theory also claims that if the action does not represent the goals of humans, rather than just the benefit of oneself, than the action must again not be performed. Therefore, Enron Corporation violated Kantian ethical principles in multiple offenses, through their crooked accounting practices and the misleading of their stockholders. One method used by Enron to mislead stockholders was how they reported revenues in their financial statements. This was called their “merchant model. What the merchant model consists of is reporting whole values of their trades as revenues. This was misleading to their stockholders because the stockholders believed that these profits were actually fiscal gains. By applying Kant’s theory, and basing the situation from the two conceptual concepts asked by the theory, one can analyze that Enron’s actions were ethical injustices and were wrongly committed. Imagine if all companies, as well as the leaders of those companies acted in the same manner as the executives from Enron Corporation. This would lead to a society that would not be able to function with the proper mannerisms that it does now. If all companies were misleading their shareholders and reporting false profits, such as Enron did, then the economy would not be able to function in any manner. This would ultimately lead to investors not being able to trust any of the companies they had previously planned to invest their money in.
These events would cause a total destruction of the economy. Not only did Enron’s actions go against the first of Kant’s questions, it also contradicts the second of Kant’s questions. Enron violated the second question by falsifying their financial statements. It is clearly obvious that Enron’s executives were only thinking about their own personal gains throughout this entire process. What Enron’s executives really did was take advantage of the people underneath them. These executives were misleading the general public and taking advantage of them for personal financial gain. In no way was the actions made by Enron Corporation’s executives for the betterment of human beings as a whole. Therefore, through Kant’s theory, the actions completely violate the morale principles stated by said theory. Enron’s treatment of their auditor, Arthur Anderson, is another example on how they violated Kantian principles. Anderson received millions of dollars from the Corporation in the year and a half when Enron was enjoying their financial success. This money was being reported as “consulting fees and “audit fees. But this obviously wasn’t the case.
Enron Corporation was paying Arthur Anderson, as well as his auditors, so that they would overlook the financial mistakes in their books. If real people in todays society acted in this same manner, which includes paying off people to incorrectly complete their job, then society would be completely in shambles, and would end up in complete disaster. By paying off Arthur Anderson to overlook their fraudulent actions, Enron’s Executives remained the only group that was reaping the benefits. This action did not make society better, it only benefitted the people that were in charge of the decision. By paying off the only person that was in charge of making sure all finances were in line, the shareholders were severely impacted. This unlawful business practice lost them a lot of money.
Acting in such a manner where only one person benifits is a direct violation of Kantian principles. I agree with Kant’s assessment of Enron’s actions. I believe that the executives had full intent of being the only beneficial ones in their situations with the actions they took, as well as their mindsets behind it. Enron’s executives were alright with ruining the lives of common people, as long as they could continue to reap the benefits and build their profits. I agree that people have a right to act in a moral way so that humans are able to survive and thrive in a normal society. By misleading their stockholders and paying off auditors, Enron’s executives were thinking only about themselves, which revolved around their own personal gain. They showed no sympathy for all those being crushed and brought down in the process. Enron’s actions are looked at as some of the most immoral acts in United States history. The executives of Enron Corporation illegally grew the company’s value to around $60 million. But, their corrupt ways finally caught up with them, because a year and a half later, the same methods that grew them to that point was the cause of their downfall. These actions ended up leaving the company to rightfully file for bankruptcy in late 2001.