StakeholdersResponsible for Enron`s Collapse
StakeholdersResponsible for Enron`s Collapse
Thelarge number of the stakeholders who took part in a series of eventsthat resulted in the collapsing of Enron in 2002 makes it difficultto pass the blame to an individual. For example, the management andthe directors of Enron, an energy company, knew that it wasexperiencing financial constraints, but kept on promising theshareholders that it was still strong. This allowed the managers(including the CEO Ken Lay) to sell their shares at a higher pricebefore the news of the financial challenges could reach the public.For example, the CEO was able to take a loan of $ 94 million andrepay it in the form of highly-priced shares (Accounting Web, 2003).In total, Enron’s managers sold shares worth $ 1.1 billion throughunscrupulous transactions.
Accountantsworking for Arthur Anderson, LLP played a critical role of devisingaccounting schemes that made accounting records of Enron appear to beaccurate than they were (Accounting Web, 2003). These accountantswere accused of failing to conduct a proper analysis of differentfinancial transactions that resulted in the loss of money. Inaddition, Vinson & Elkins, a legal firm based in Houston, wasblamed for approving a questionnaire that was used to hide debts andbook earnings at Enron.
Moreover,several politicians (including President Bush, Senator Kay Bailey,and Senator Chuck Schumer) were accused of receiving large sums ofmoney from Enron for political functions, such as campaigns (CablesNews Network, 2003).
Inconclusion, the fall of Enron can be attributed to many factors andstakeholders. However, the blame can be passed on to the board ofdirectors, which is responsible for the overall operations of thecompany. The board ought to have discovered the series of illegaltransactions and take the necessary measures to protect the goingconcern of the Enron.
References
AccountingWeb (2003, December 1). Report: Excess, lawyers, accountants to blamefor Enron’s fall. SiftMedia.Retrieved June 8, 2016, fromhttp://www.accountingweb.com/aa/law-and-enforcement/report-execs-lawyers-accountants-to-blame-for-enrons-fall
CablesNews Network (2003). Bill press: Who is to blame for Enron? CNN.Retrieved June 8, 2016, fromhttp://edition.cnn.com/2002/ALLPOLITICS/01/16/column.billpress/index.html