1. Ethics in Organisation Lessons Learnt from Enron BECG-CORE

2. Organizational Ethics:4 bottom lines 3. Enron Scandal

Enron stands for the greatest company scandal in the history of the US economy and has become asymbol of corruptionfor the whole Western economic system.

4. Legend-OutLow-In

7 thLargest Company

100Billion$+revenue

1.8 Million$ Benefit in 5 yrs.

88.6% increase in 2000

New Economys Gem

CEO named as Messiah in the Energy Sector by Economist

5. 4500 employees lost their jobs.

Investors lost some 60 billion dollars within a few days; for many it meant losing their old-age security.

The pension fund for the company's employees was obliterated.

6. Citizens trust in the American economic system was destroyed.

Losses on the financial market amounted to the worst stock value loss in peaceful times.

Banks were suspected of collusion.

The auditing firm Arthur Anderson lost its accreditation.

7. The rules for financial reporting were drastically sharpened:

Sarbanes-Oxley Act

The close ties of the company's founder, Kenneth Lay, to US President George W. Bush came under sharp criticism.

8. Political Scandal-Lack of Equity

29top executives : 1M $ in stock options before bankruptcy whereas employees were forbidden to sell their options

CEO alone : sold 67m $ worth of options

Severance package:13 500 $ per employee

63% of the 21,000 employees lost all their pension plan (plan 401K)

9. Dabhol Power Corporation, India

One of the few real assets of Enron

65% Enron; 10% G.E; 10% Betchel; 15% India,

Biggest gas power plant in the world

3 M$in investment (10% foreign investments in India 1992-2002)

Project of 2 200 megawatts

10. Human Rights Violation

Displacement of 2 000 people and appropriation of land without prior notification

Arrest of 300 pacific protestors a day, average of 8-day detention period, without trial and with violation of human dignity

Demonstrators, mostly women, dragged from their homes, and beaten (lath charge, tear gassing, helicopters), detention, humiliation, intimidation

11. Environmental Abuse

No impact study; no alternative site

Mockery of consultation process

Use of drinking water from population (8 300 liters / minute)

Pollution of rivers by used waters

Contamination of sea-water (down-load of 13 million liters of warm water per day)

Destruction of plantations (mango, cashew) and fisheries

12. Characteristics of New Economy management: Value of Idealized Top

• CEOs = 500 times average employee salary

• bonus gone from 3$ to 64$ per 1000$ of value in 10 years

• aggressive PR; image of responsibility

• only 1.5% of stock options paid to employees; etc.

13. Complicity or cooptationof social actors :

Governments (Enron 7M$ public investments) : USA, Germany, UK, France, Italy, Japan);

Financial analysts; accounting and consultation firms;

Business schools; business press; host governments; etc

14. Watkins Whistle blowing has paid

Cleansing of financial markets

Some companies enter stocks options into their books as expenses : Boeing, G.E., G.M., Citigroup

U.N. Global Compact; CSR; social and environmental accounting; OECD principles,Caux Table; etc.

36% of CEOs more aware of integral responsibilities (but only 10% invest in CSR)

19% of transnational companies have disinvested from countries where Human Rights are violated

15. How to bring accounting firms to integrate CSR norms ?

These norms shouldrepresent reality

ensure company governance

make companies responsible not only towards shareholders

de-co-opt media and other organizations

increase the integrity of business students and managers ?

16. Organizational Ethics, 4 Ways