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6-16 Ethics & Social Responsibility [CH 6

national convention of fraud examiners in Las Vegas, in the summer of 2013, he told
his audience that corporate practices had gotten worse. “In my opinion,” he said, “the
problem today is ten times worse than when Enron had its implosion.” Implosion?
Maybe a more accurate descriptor would be, when he and his conspirators got caught
in their frauds that destroyed Enron?

The educational background is included in the descriptions of these men to remind
the reader that education does not make or guarantee honesty or integrity of the
individual. As Harold O. J. Brown observes in his book The Sensate Culture (Dallas;
Word, 1996), that today’s crooks are better educated, but crooks none the less. The
record indicates that these men also had moral training at home and in their churches
and synagogue, but the issue is that they decided to act unethically, contrary to their
upbringing, and decided to make dishonest decisions, to benefit themselves. Were they
selfish and did they decide to not follow The Natural Law?

Arthur Anderson, an accountancy firm. Arthur Andersen was one of the five largest
audit and accountancy partnerships in the world. Arthur Andersen was found guilty of
obstruction of justice for shredding the thousands of documents and deleting e-mails
and company files that tied the firm to its audit of Enron, and relevant to the SEC
investigation. Although only a small number of Arthur Andersen's employees were
involved with the illegal activity, the firm was effectively put out of business; the SEC
is not allowed to accept audits from convicted felons. Voiding Arthur Anderson’s
license to audit public companies, caused it to lose the majority of its customers and

effectively closed the firm. Arthur Anderson did dispute the license forfeiture and was
reinstated, but its few executives had irreparably damaged its name and reputation.
The company surrendered its CPA license on August 31, 2002, and 85,000 employees
lost their jobs.
Financially, Enron employees and shareholders of Enron stock received limited

returns through the lawsuits they had to file, despite losing billions in pensions and
stock market value.

Reforms
The Enron scandal did, however, produce some reforms. After Enron, many
business schools now include ethics courses, and chapters on Ethics are included in

Introduction to Business textbooks. Congress enacted Sarbanes-Oxley in 2002, a law
that adopted new standards for audit reports, required disclosure of companies’
relationship with entities of the sort created at Enron, and mandated that executives
sign off on financial reports.

Ethics in Business
Ethics in business covers a broad range of topics, and it all comes down to honesty,
fair play, right and wrong—it is not giving everything away. The concept of ethics
comes from a morality base that has been discussed and expresses itself in a sense of
responsibility—to a community, to employees, to suppliers, and to shareholders. Some
would have you believe that what is ethical, or what is right, can vary depending on
the moral’s perceived in society under the assumption that absolute right and wrong do
not exist. This lends validity to the “law of the jungle,” take advantage of the weak,

“it’s only you and nobody else that counts.” These ethics are very transient and subject
to the will of the over-powerful. However, moral absolutes do exist.
To stay in business, business people must always be ethical. Yes, news articles are
replete with stories of individuals in large corporations and government engaging in
unethical acts to advantage themselves or promote business. These individuals are
hiding behind the shield afforded by the firm or government agency with a power of
authority, and the anonymity that a large organization can provide, until they are
caught. And they eventually pay a price for their misdeeds.
To stay in business, business people must embrace the proposition to “Abstain
from all appearance of evil” (1 Thessalonians 5:22, KJV). There is right and wrong,
legal, illegal, moral and immoral. Today’s elite thinking segregates and

Readers are Leaders, Leaders are Readers, non-readers follow!
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