e common to refer to Enron as a case of ethical failure, it must also be recognized that the very real and significant ethical failures occurring at the firm were made possible in part by the regulatory system itself. From the perspective of this writer, examining the dual failures involved in the Enron case should give rise to recommendations for stricter oversight and regulation and changes in the reporting laws that will prevent a new case of this nature from occurring.
In describing what went wrong at Enron, Robert Prentice (2003) noted that business law professors generally view the Enron scandal as evidence that business law and business ethics should have more of a presence in business school curriculum. What happened at Enron involved a deliberate decision on the part of chief executives to obfuscate the truth regarding its financial position and profitability. Prentice (2003) maintains that despite a well publicized code of ethics, Enron was an organization where money was the only yardstick and ethics had little place in anyone's decisional calculus. This mindset originated at the top with Chief Executive Officer Kenneth Lay who pursued personal wealth at the expense of his corporation's solvency.
Prentice (2003) asserts that under Lay's leadership it was continually drummed into employees that making money was the only necessary goal. Those who did not make their numbers were demoted and destroyed while those who did meet their productive quotas received extremely large bonuses. Prentice (2003, p. 422) stated that "the centrality of money was cemented with stock options that allowed Tom White to leave Enron to be Secretary of the Army, salvaging $14 million in severance payments and stock payments." Other Enron offices profited in the range of tens of millions and even hundreds of millions of dollars.
Clark and Demirag (2002) believed that there are many sides to the Enron case, but also claimed that what ...