For example, Bernard Madoff was a respected financier who “helped” secure people’s money and put in a savings account. But what people didn’t know was that he would commit fraud by taking their money and fooling them it was all still there. He roughly took about $65 billion dollars in total from people. This hurt many people not only financially but emotionally as well. These people felt betrayed by someone who seemed so innocent can do such a crime.
1) What were the individual factors that contributed to the failure of Enron? Briefly explain two key factors. In the repercussion of Enron’s bankruptcy filing, numerous Enron executives were charged with criminal acts. Those charges were fraud, insider trading and money laundering. Enron was described as “House Of Cards” as it was built over a pool of gasoline.
Answer to questions: The ethical issues involved in the Madoff case was his misconduct and deceitful activity. He lied to investors, cheated out his financial interests, and stole from thousands of people around the world. He took money from new clients and paid it out to existing clients. I don't believe that Madoff worked alone. Even if nobody helped him deceive investors, people knew about it, and the act of knowing and not reporting a white-color crime is guilty by association.
The ultimate goal is to protect investors. Reason Many acts of corporate corruption in the 1990s and early 2000s brought on this regulation. There were many loopholes that allowed for accounting errors without any legal incentive to correct the problem. Due to the accounting practices at companies such as Enron, Tyco, and WorldCom investors lost billions. The accounting practices created a scandal in which the companies were able to hide information from investors.
When this information got to the public. John Rigas as well as three of his sons – James, Tim and Michael – resigned from the board. The Rigas family rigged the company's balance sheet by inflating the number of subscribers and increasing the routine expenses that were entered as capital expenses in the balance sheet. Ethical Dilemma The ethical dilemma present here is the conflict of interest between the founders of the company and the remaining parties like
In addition the interest on the debt alone was £9 million per year. All of this made it clear to Pitt that something had to happen to try to escape from the mess the government was in. In the 18th century there was a serious problem with people smuggling goods such as tea and tobacco into the country. This was to avoid the duty tax on products, which gave them a huge profit margin. This profit margin made the risk worth taking for many, resulting in the government losing money due to be not paying duty tax.
Brief overview of WorldCom’s case and general discussion of its fraud nature: Beresford, Katzenbach and Jr (2003) stated that, from 1999 until 2002, a few executives at WorldCom perpetrated accounting fraud that led to the largest bankruptcy in history. The principle business strategy of its CEO – aggressive growth through acquisitions underlined its collapse and eventually imposed pressure to management to commit fraud. In fact, WorldCom’s fraud was a consequence of a set of complex factors, including the existence of dominant senior management, structurally weak internal controls, inadequate audits by Arthur Andersen, the poor oversight of the Board, and pressure from Wall Street’s expectation, etc. The large scale collapses of WorldCom and Enron triggered immediate remedies of corporate governance, essentially the Sarbanes-Oxley Act, which aimed to solve the issue of “lack of confidence” in the reported financials. WorldCom’s fraud was an intentional misconduct of the perpetrated senior management that results in an $11 billion material misstatement in the financial statements via two principle forms: reduction of the reported line costs and exaggeration of reported revenues, in order to create an image of increased earnings and revenue and hold the line costs lower than the industry average rather than indicate the truth and fairness of WorldCom’s wealth and progress (Beresford et al, 2003).
Many people know of Bernie Madoff as the man that perpetrated by far the largest scam in the history of the United States, if not the world. His reputation of a successful investor, chairman of NASDAQ, and financial genius took a turn for the worst when his so called split-strike conversion strategy turned out to be nothing but a momentous Ponzi scheme affecting thousands of investors from around the globe. A Ponzi scheme is “a fraudulent investment operation that pays returns to investors out of the money paid by subsequent investors rather than from legitimate profits (Fitzpatrick, 2010).” The Ponzi scheme was named after Carlo (Charles) Ponzi who fled Italy for America at the age of 21. In 1919 Ponzi developed a scheme to get investors
Unethical professional values were symptoms of systemic problems for Enron. “Enron’s systems of oversight, ethical disclosure, and corporate accountability were flawed leading to the demise of Enron” (Schuler, 2009, para. 2). In fact, in 1999 Enron directors waived the company’s code of ethics allowing the CFO, Andrew Fastow, to run an investment partnership that traded with Enron. Enron not only committed financial fraud, but it has been alleged that bribes
The Collapse of Enron Barbara Bonnema Post University The Collapse of Enron What led to the eventual collapse of Enron under Lay and Skilling? How did the top leadership at Enron undermine the foundation values of the Enron Code of Ethics? How did Enron’s corporate culture promote unethical decisions and actions? These questions are answered and explained with examples as follows: 1)There are several reasons that eventually led to Enron’s collapse: a) A corrupt leadership at the top. Numerous Enron executives were charged with criminal acts, including fraud, money laundering and insider trading.