Case Analysis of the Enron Scandal
The Enron Scandal is one of the biggest accounting frauds in American History. Enron is a company, which had grown exponentially for over two decades before it was discovered that the directors and management had been appropriating the Company’s assets to their own benefit. In a mega cover-up, the officials had found a way of fabricating accounting information to portray a notion that the Company was doing well. Upon discovery of this scandal in October 2001, Enron Corporation was declared bankrupt and subsequently dissolved. Arthur Andersen, a big audit and accountancy partnership was also dissolved because of its role in concealing the Company’s scandalous records (Gillan & Martin, 2007). Essentially, once most famous company worldwide fell down so fast and in utmost disgrace. Here is an analysis of the nature of the white-collar crimes committed amidst these fraudulent activities.
The Enron scandal was propagated by three predominant figures. The first was the Chief Financial Officer of the Company who secretly opened another company and appropriated Enron’s property to this new venture. These actions were concealed by another trusted member of Enron’s management staff; Mr. Kenneth Lay, the then CEO of the Company. Aside from the insiders of the Company, Arthur Anderson, a renowned external auditing firm was also instrumental in bringing down the company. This is because the audit firm gave Enron a clean bill of health even after discovering major flaws in its books of Accounts.Insights from the articleThis article provides a clear illustration of major syndicates that may prevail in a set up where perpetrators owe a fiduciary duty to the victims. In such circumstances, it is very hard to discover any criminal activity without the help of an insider; a whistle blower.
The severity of the crimes.
The crimes committed in this scandal are of general fraud and abdication of general professional duties. They are extremely severe because the victims affected are many innocent shareholders who invest upon relying on statements made by companies and end up losing big. In this case, billions of money were lost to the detriment of thousands of investors and shareholders.Disposition of the CrimesThe finer details of the specific crimes in this case always give the defendant a chance to pose as an innocent manager or overseer even if they are indeed the masterminds of the syndicate. Therefore, abhorrence of such crimes is not mostly emphasized on by the society.Comparison with a street crime and its criminal justice.
The crimes in this case study fall under white collar crimes. White Collar crimes are crimes committed by persons of respectability and high social status during their day to day occupation (David, 1996). In contrast with street crimes, they can only be committed if utmost intellect is employed. Also, the criminal justice system in relation to white collar crimes seems to be more reluctant to prosecute such felons. Even if they …