Enron Scandal: Ethical Corporate Governance and SOX Act 2002

Business Law and Ethics

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Discuss this case in relation to ethical corporate governance and the Sabane-Oxley Act of
2002. ......................................................................................................................................4
CONCLUSION................................................................................................................................5
REFRENCES .................................................................................................................................6

INTRODUCTION
Business laws are the laws that has been helping in formation of an business organization
within legal framework. These laws have prescribed those set of rules which helps in
establishing of an organization in appropriate manner. Such laws has prescribed a common base
with rules and regulations which helps in achieving of goals and objectives set by an business
entity. Ethical laws consists of those points which is important for an organization to maintain
healthy environment at workplace. In it various guidance is given which makes an organization
maintain discipline at working station (Suryanto and Maulidiana, 2019). Scope of both the laws
are wider as they deal with all kinds of activities existing in an business organization. Nature is
dynamic as they cover various elements existing in an business. This file shall deal with the
Enron scandal case with relevance to corporate governance and SOX Act 2000.
MAIN BODY
Enron Fraud scandal: In this scandal, an organization named Enron is an organization that is an
American based company which was formed with the merger of two organisations Houston
Natural Gas and Inter North. The scandal also resulted in the dissolution of the firm Arthur
Andersen, LLP. It is one of the fifth largest audit and accountancy of partnership in world. This
scandal is the largest fraud in American history. Jeff Skilling has been hired over developing
staff with executive that makes development over covering loopholes, special purpose and
formation of financial report is been done by them (Forganni and Reed, 2019). When Enron was
established, natural gas and electricity were under the monopoly of state . Enron started dealing
online due to the deregulation of the energy market which free the organisations to operate free
from the US government scrutiny. The first global commodity trading website was launched as
EnronOnline by the organisation in November 1999. The company also made artificial energy
crisis in California so that there are chances of manipulating power supplies and thereby
charging excessive prices for the same. Enron misrepresented balance sheet of the company to
keep huge debts off. Fraudulent accounting was done which can inflate the profits and the assets.
The corporation even showed fraudulent earnings to its investors so that new investors can be
attracted. The organization hide that it is having poor debts and not delivering projects.
Shareholders of Enron filed legal suit against the company because shares rate was also going
down to one dollar in mid of 2000. In this case investigation started by the agency of U.S.