Business Law and Ethics Assignment 2 (GC01730)

Executive Summary

Any business success depends mostly on the management and maintenance of the business with proper regulations and ethical support by the executives. There are many things that happened to the Business and thus various laws and acts are emerged to resolve the issues. This document shows the relationship of two famous legal factors connected with the ethical corporate practice in the organization: ethical corporate governance and the Sabane-Oxley Act of 2002 and the prospects to the connection with the Enron Energy Corporation of the USA. The company could not manage to ensure ethical corporate governance within their business and thus they disappeared from the marketplace for bankruptcy.

Table of Contents

Executive Summary.

1.0 Introduction.

2.0 Overview of Enron fraud scandal

3.0 Ethical corporate governance and Enron fraud scandal

3.1 What is ethical corporate governance and why it is matter

3.2 Discuss Enron’s case in relation to ethical corporate governance.

4.0 Sabane-Oxley Act of 2002 and Enron fraud scandal

4.1 What is the Sabane-Oxley Act of 2002?.

4.2 Discuss Enron’s case in relation to the Sabane-Oxley Act of 2002.

5.0 Conclusion.

Reference.

1.0 Introduction

Enron Corporation was an American-based business company that sold commodities, energy, and Services Company. The company was established in 1985 in Houston, Texas collaborating with InterNorth Houston Natural Gas (Ferrara et al., 2020). The business from its founding was doing better in the marketplace and made huge revenues. But while the company hired its new CEO Jeffrey Skilling, the business began to count its demise and resulted in bankruptcy for the illegal practices of the executives. This report discusses Enron’s case in relation to ethical corporate governance and the famous Sabane-Oxley Act 2002 and their aspects.

2.0 Overview of Enron fraud scandal

Poor accounting management and hazy reporting about the inconsistent costs and revenues caused the Enron bankruptcy as the company was able to hide the actual financial conditions and huge debts with the bank resulted from failed projects and deals (Sterling, 2016). These phenomena happened from the time being while they appointed their new CEO and he managed to grasp the executive powers over the directors’ board. He kept aside the board members of the actual finance reports of the company. These illegal actions by the executives led the company to bankruptcy and the company could not manage the collapse. As a result, almost 4,000 employees became jobless, many shareholders lost their last accumulation, pensions, capital for the child’s college, school and university insurance.

The shareholders knowing the facts complain against the company to the Securities and Exchange Commission of the USA stock, and the commission took the allegations into account and started an inquiry on October 31, 2001, and the authority operated an investigation against the company and proclaimed Enron as a bankruptcy. In late 2001 Enron’s most of the shares radically dropped from more than $90.00 to just pennies which were seen as a calamity to the many employees, investors, and the watching nation.

3.0 Ethical corporate governance and Enron fraud scandal

3.1 What is ethical corporate governance and why does it is matter

According to Zimmerli et al. (2018), ethical Corporate Governance within an organization means the application of the proper management with the rightful processes and the policies by which the company deals with the stakeholders like shareholders, employees, investors, and suppliers etc. The business company makes their management policies, strategic plans, and working schedules for the workers by maintaining the laws and ethics by the government and customs in vogue in the societies and cultures, religions, manners. And the integrity practices by the executives ensure the company’s growth and development by keeping the records of accounting neat and clear for the investor’s queries (INVESTOPEDIA, 2020). Ethical corporate governance also comprises the performances of the workers in the workplace including their responsibilities, behaviors and attitudes to the company and towards the customers.

Ethical Corporate Governance encompasses the equal participation of the workers in the development programs and skills development training arranged to check and balance the qualities required by the company for all personnel. The company must ensure safety and securities in the workplace so that female and male workers feel free to express their voices over their rights from the company……………………………

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