Review and critique of one of the following worst corporate scandals of all time: • Waste Management Scandal (1998) • Enron Scandal (2001) • WorldCom Scandal (2002) • Tyco Scandal (2002) • American...

The University of Queensland
1
Management
Management
Management
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Abstract
Financial scandals in the companies will directly affect the market and growth of the economy. We know the fact that companies are playing an important role in productively developing economy. So when there are financial problems in the companies it will negatively influence the market and customers. While analysing the Enron financial scandal case we can able to understand that, due to accounting fraud and other related issues the internal and external markets affected. Most of the customers and investors lost their money and entire market growth is declined due to the impact of this issue. In this research paper, we are analysing the various aspects related with Enron Financial Scandal
Enron Financial Scandal – Summary
Enron is US-based Energy Company filed bankruptcy in the year of 2001, Kenneth Lay is the founder of the company and in the year of 1990, the company hired Jeffrey Keith Skilling as the CEO of the organization. Jeffrey Keith Skilling and some of the staff cheated the regulators with fake holding and fraudulent accounting practices (Luke 2018). The leaders of the company used special purpose vehicles to hide the debt and assets from the investors and other stakeholders. Market to market accounting helped the company for showing profit than the actual and due to these shares went from $90.24 to 0.26.
Source: http://news.bbc.co.uk/2/hi/business
The issues directly affected all the stakeholders. More than 20,000 employees lost them and their medical protection and employees also lost $1.2billion in retirement funds. Almost of all the business groups which are relayed on the services of the company also faced serious issues related to the financial scandal. As per the report of Forbes (2019), shareholder lost more than $74 million amount due to this issue. The employees also get affected and they lost their job and other related benefits (Flower et al 2019)
Major Players
1. Kenneth L.Lay
2. Jeffrey K Skilling
3. Andrew S. Fastow
4. Richard A. Causey
5. Lea Fastow
6. Arthur Anderson
Kenneth L. Lay – He is the founder of the company, he was involved in the scandal and he helped the company to transform from small company to a big one. In the year 2001, he officially resigned from the post of CEO and he sold more than 4 million shares of the company for $ 184.
Jeffrey K. Skilling – He was the former CEO of the company, the...