LEG100 – Business Law I
Professor: Gloria Sodaro
Enron began as a domestic natural gas pipeline company which was established in Houston, Texas during 1930. After operating for thirty years, during the 1960s; Enron decided to expand its corporation into different segments in order to invest in the diverse levels of the energy market. In the late 1980s and early 1990s, Enron established a major change in the company’s operations by making the “move from being a domestic company to a global provider of energy products.” (History of the Workplace, 2003)
This will only create more opportunity for Enron to develop and in the mid and late ...view middle of the document...
Enron and Arthur Andersen viewed the GAAP as rules instead of principles in which they interpreted the GAAP in a selfish way. Being fair was not taken into consideration which is one of the basic fundamentals of GAAP. “They also ignored the legal precedent that emphasizes fairness over detailed rules, as well as the accounting concept that emphasizes economic substance over legal form” (Cunningham & Harris, 2006).
Enron as a Corporation was held responsible for the violations of the law committed by its executives. The employees present the image of the company, as with any other company. The executive decisions executed during their employment at Enron have left the employees responsible for their executive’s actions. Kenneth Lay stated, “As officers and employees of Enron Corp., its subsidiaries, and its affiliated companies, we are responsible for conducting the business affairs of the companies in accordance with all applicable laws and in a moral and honest manner” (Enron Code of Ethics, 2000).
Enron’s involvement with Merrill Lynch is based on a transaction that is supposed to show that Enron made their earnings target. Prosecutors stated, “Enron sold three electricity-producing barges moored off the coast of Nigeria at the end of 1999 in a sham deal designed to help the energy company...