Introduction
The realization of malicious and scandalous activities going on in any institution is troubling. More troubling is the fact that, upon realization of financial misconduct, investors feels humiliated, cheated among other mixed reactions. The case of Enron and Bernard Madoff is one such case in which investors were deprived of a staggering $ 65 billion. However, the public uproar that was experienced at the time, most of whom never even held shares with the culprit institutions, is not because these institutions had done a grievous crime, but rather that on looking at such an institution, there seems to be a clear reflection of most Americans. The condemnation is as a result of the ugly truth that people see about themselves reflected by Enron’s and Madoff’s conducts (see Zuckoff, Shapiro, Gillers & Mihm, 2009).
Enron, Madoff & Financial Events
Over time, the shares of Enron skyrocketed doubling its initial value within a year, an aspect that should have raised numerous questions yet no individual dared inquire of the trend, as the financials of the institutions were vindictively made to look real (see Stewart, 2008; Peavler, 2012; and Scheer, 2012). Underneath the surface, Enron had enormous debts whose paperwork was intentionally shredded to hide the truth and the financial statements doctored to give an impression that everything is much better. It is further noted that the auditing firm was under pressure to burry this potentially incriminating evidence, an approach they were happy to consider (Zuckoff, Shapiro, Gillers & Mihm, 2009). On the other hand, Madoff whose investment on a shoddy Ponzi scheme, left its investors with a debt amounting to $ 65 billion according to Zuckoff, Shapiro, Gillers & Mihm (2009). While this was happening, Madoff pocketed $ 18 billion; an enormous figure (Zuckoff, Shapiro, Gillers & Mihm, 2009). Investors were treated to a luxurious two figure annual returns, whether during good times or bad times but no questions were asked, raison d’e ̂tre being everyone needs to make profits.
Scheer (2012) highlights a rather invigorating discovery, noting that while such an incident is highly condemned with the media on the forefront, other big boys are busy making merry through other means and burying their tracks. While the denunciation on Enron and Madoff takes shape, companies like Barclays, Citigroup, JPMorgan, HSBC among others have been on the forefront in scandalous activities on the Lidor (London Interbank offered rates); where heavy manipulation is characteristic while little evidence is available (Scheer, 2012). It is estimated that a massive $ 700 trillion in derivative market is questionable, a sure follower of Enron’s and Madoff’s foundations (Scheer, 2012). This shows that the vehemence in condemnation on Enron and Madoff is because they reflect the ugly yet ordinary state of affairs in divergent fronts.
Consequences and Implications for Lack of Code of Ethics
Since there lacked stringent code of ethics for Enron and Madoff to ascribe to, it became easier for doctoring of the financial statements especially given the fact that there was no transparency in as far as disclosure and financial reporting standards is concerned. The problem is further exacerbated by the fact that, the new breed of scandalous activities is taking a new shape according to Scheer (2012), whereby large corporations first actively participate in making new laws such that their intended malicious activities becomes hard to note, then they go ahead to commit their targeted crimes. This may take years or decades for the truth to be realized even if funds embezzlement is happening under the nose of investigators and policy makers.
This similarly causes deteriorating investor confidence, increased blame games, questionable transparency levels, need for increased scrutiny of financial dealings of most companies, and stricter regulations in addition to revision and indulgence towards basic business reporting models (see Scheer, 2012). As a matter of fact, when there is a challenge or an issue in any corporation, the first target is mainly the Chief Executive Officer and or the chairman of the corporation, such that, the problem is to a great extent buried under these two individuals, even if they were not aware of such happenings in the first place. This makes hiding further revelations indubitable.
Enron and Social Responsibility
The fact that Enron intentionally decided to indulge in activities that in essence jeopardized their investor confidence and financial stance shows gross disregard of stakeholder interest and integrity. Enron’s activity in the political arena was questionable even though it purported that it remained politically neutral, but signs indicate otherwise (Scheer, 2012). Enron fervidly advocated for integrity coupled with respect as regards to annual reporting, but evidence show that this was never the case. Their shareholders were lied to, their employees wooed to make investments, especially, pension investments to no other company except Enron, and when the company collapsed, the repercussions and the harsh reality resulted. Scheer (2012) posits that with the chairman earning a massive $ 10 million a year, it was possible to ignore the early signs that things were amiss.
Conclusion
In conclusion, the main reason for heated condemnation towards Enron and Madoff is not in the intensity of their sin, but rather in exposure of the ugly reflection of individual’s true self. This is in line with malicious investment habits, lacking moral ethics, in addition to, denigrated social irresponsibility by many.
References
Peavler, R. (2012). Top 10 financial events of the decade: The top financial events that have affected business in this decade, Business Finance Guide. Retrieved from bizfinance.about.com/od/currentevents/tp/Top_Ten_Fin_Events_Decade.htm
Scheer, R. (2012). Crime of the century, Rapid City Journal. Retrieved from http://m.rapidcityjournal.com/news/opinion/scheer-crime-of-the-century/article_78b72aac-b13e-58c9-b173-6b847ad6f6df.html
Stewart, J. B. (2008). The lessons to be learned from the Madoff Scandal, The Wall Street Journal. Retrieved from http://online.wsj.com/article/SB123067814436743871.html
Zuckoff, M., Shapiro, D., Gillers, S., & Mihm, S. (2009). Is Madoff Wall Street’s Greatest villain?, The New York Times. Retrieved from http://roomfordebate.blogs.nytimes.com/2009/03/12/is-madoff-wall-streets-greatest-villain/
