A Lie to Protect Company

Where Martha Stewart was convicted for lying about a specific transaction involving much less than $100,000, Enron represents a situation in which an entire company was tainted with the image of lying in order to protect the financial assets of the company, and which used other companies?including Arthur Andersen?to bolster its falsehoods. Enron executives are only now being charged with crimes ranging from securities fraud to insider trading, and trials for the highest-level executives will begin in 2006. Motivation for these executives is a lot easier to identify than for Martha Stewart?these executives were motivated by a desired to provide the most certain financial statements possible, even as soon as those statements did not reflect the activities of the corporation.

The price of lying at Enron and Arthur Andersen are quickly quantified?thousands of pensioners lost their retirement, Arthur Andersen's demise cost thousands of jobs?and yet tough to quantify at the same time. Due to the magnitude of the cash and the thousands of persons involved, it is impossible nonetheless to really calculate the ramifications of the collapse of Enron. Perhaps more importantly, the public trust in accountants and in business executives has been lost because of the Enron scandal .


of an entire marketplace that has suffered as a result of deceptive practices. In the case of tobacco, the marketplace pursued advertising and marketing methods that targeted young folks and ignored the health issues associated with smoking?including smoking as a result in of lung cancer. This strategy worked for many years as the lobbying efforts of the marketplace prevented powerful government response. Cigarettes were prohibited from television promoting decades ago, and marketing was ostensibly supposed to avoid targeting youth in the 1990s, but advertisers had to be formally warned and the government eventually pursue expensive litigation previous to the industry as a whole was brought into line. Even now, the government faces contradictory methods as it tries to move forward in lawsuits against the industry that have the capability to bankrupt companies, but which observers fear will offer only slight penalties that will not have long-lasting results (Byrnes 70).

Enron's collapse, however, demonstrates the consequences once lying becomes a part of corporate culture. Lay, Skilling, and other executives at Enron encouraged high levels of profit performance and rewarded "creative" financing that encouraged lying by other executives. Lying through such devices became commonplace and accepted, with the result that the entire corporate culture supported the deception. Leaders who create an environment exactly where lying is rewarded are creating an environment that is subject to collapse (Gini 11).

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