LEGAL AND EXECUTIVE DECISION MAKING AND FALLOUT AT ENRON
There is enough blame to go around concerning Enron's collapse. The major cause was deception on the part of its executives, and compliance by both Enron's auditors, Arthur Andersen, and its various legal staffs and outside consultants who "approved" the activities of Enron's house of cards. "The Enron case is a dream for academics who conduct research and teach, For those currently or formerly involved with the company, such as creditors, auditors, the SEC, and accounting regulators, it is a nightmare that will continue for a long time" (Thomas 2002 41).
The Enron mess is perhaps the greatest failure of human resources and employee-management relations in the history of American industry. Even when the stock began to sink, Enron employees were not permitted to take any of the stock out of their 401Ks and other retirement plans which were vested in Enron stock. Kenneth Lay, Enron's chief executive and others sold millions of dollars' worth of their stock. The employees could not do so. Worse, the employees were constantly lied to.. There were even more lies: "The affable Lay told everyone that if operating earnings were on target, as it appeared they would be, bonuses would be paid" (Saporito 2002 34) "At a company gathering caught on videotape, the son of a Missouri minister promised that there wouldn't be any layoffs, and that Enron would rise again. For once, though, the rank and file weren't drinking Ken's Kool-Aid" (Eisenberg 2002 37). What makes this a human relations catastrophe was that Enron executives kept on painting rosy pictures of the company, even as they knew (or should have known) that the company was in deep financial trouble. "Enron officials actively encouraged workers to buy Enron stocka.Enron workers were further hamstrung by Enron's switching of plan administrators and freezing of all asset shiftinga.The result was ruin" (Kadlec 2002 34) Ru...