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Enron's rapid rise

The mighty and rich falls at sometimes. Chairperson and CEO of Enron, Ash Kenneth Lay, whose company got crashed. The company was founded in the year 1980, the chairperson soon turned into a player of a dominant nature in the arena of trading of energy, which is evolving fast to become the seventh biggest company of America. The real fact is that no one is aware aware about the money making process of the company. In the year 1998, the Enron’s stock value has been enhanced by 40%. The immediate year, faced a boom till 59% and in the year 2000, it increased to an unbelievable percentage at 90.

The Fortune Magazine stated through it vote that Enron is considered to be the most new company of the year in the year 2000. The Enron proudly claimed to be not only the company in the world, which is Energy Company but also, the company is leading the era in its professional field. However, when the company has been pressurized to call bankruptcy in the year 2001. December, the world came to know that the leading financial company was nothing but a mere illusory and the success of the business is based on the blocks of hype. The hype retained till the end. With the end of the company’s fast approaching financial stability, Kenneth Lay was recommending the stock of the company to its employees that the other executives and also him bailing out by cashing their shares.

The crash of Enron costs the accounts on retirement of its employees, more than dollars in billion as the stock of the company suffered from the stability to only a few pennies which can be shared. The external investors suffered a loss even more. The reason behind the collapse of Enron caught the investors by the surprise, the market value of the company was $30 billion in the year 2001, October, just a few moths before the bankruptcy had taken place. It has made the company the records of the finance and its accounts as not as clear as possible.  

The company did this through the creation of the financial structure of the Byzantine of the off balanced sheet entities of the special purpose, which are reportedly was supposed to be independent and separate from the main company. The board of directors condoned them and other practices which are dubious and the twice voted to let the executives to achieve the interests which are personal than stand contrary to the company. When the company was forced to rework on its financial statements for the year 1998-2000, its profit fall to $600 million and the debt of the company increased to $631 million.

The scandal

More worse, when the scandal is about to break, a partner organized at Anderson the incrimination’s shedding, the documents of the Enron before the investigators can lay out their opinion on them, this resulted to the 89 year old firm based on accounting was convicted while blocking the justice and it ran out of the business. The year before the Exchange and Securities Commission fining $8 million for approving the accounts, which are misleading at the management of Waste and it, had also paid $110 million in order to settle the lawsuit for the work auditing. The fall of Enron also disclosed the conflicts of interest which threatens the wall Street’s credibility analysts who are compensated, based on the capacity to bring in and rendering support to the deals of investment banking. The company is known for the industry as the dealing machine as it generates so much of the investment derivatives and loans. This might explain the reason, only the days before the bankruptcy is filled by Enron. Just two analysts from the World Street who covered the business gave the recommendation that the stock was sold to them clients.

Stories related to the corruption of business and of wrong doing and greed in the higher places have always attracted the famous press and the interest of media in business manners which were never higher. However, the incorrigible people at the company were turned out to be complicated, once the primary boundary is being drawn, the illegal works can be easily identified such as cheating, bribery, disregarding and so forth (William H. Shaw,p.52).

In the principle of ethics, theories, which are normative in nature proposes some of the basic principles for differentiating wrong actions and right actions. For the sake of convenience, these theories can be further divided into two kinds and they are non- consequential theories and consequential theories.

Different philosophers have made arguments that the ethical rightness of an activity is indicated importantly by its results. If it’s ultimate results are regarded good, the act is considered to be correct. If they are regarded bad, the act considered to be wrong. The theorists who are having moral approaches are called consequentialists. These theorists determine the rights and wrongs through measuring the ratio of  the actions which are good and bad. The right acts are considered to be the one, which manufactured greater number of goods to the evils in proportion than any other courses of actions.

The consequences

One important question that has been raised which was based on the case of Mr.Ali is regarded as who would face the consequences. Should the consequences only be taken into consideration for one own self? Or the final results would be affecting everyone? The two important theories by consequentialists are utilitarianism, egoism and they are differentiated by their different answers of their questions. Egoism advocates self interest of the individuals as an important principles based on guidance. On the other hand, utilitarianism takes into consideration that one must consider that everyone is being affected by the actions. However, both the theories agree upon the wrongness and rightness as an important functions as the result of an action.

The view that reflects morally along with one’s interest is considered to be egoism. It contends that the act is ethically right if it only promotes at its best the long term interest of the agents. Egoists utilize the advantages of long term as the main standard for measurement of the rightness of actions. If an action produces for the agent a greater ratio of the good to evil in a longer run than any other alternatives, then the action is regarded as the right one which can be performed and the agent would take into account that the benefit of the course. In regard to Mr.Ali, the philosophers compare two different types of egoism and their name if personal and impersonal. The personal egoists claim that they should pursue their longer term interest but they do not interfere into other’s activities. On the other hand, the egoists who are having impersonal attitude claims that everyone claim that should follow their own long term interests.

Egoism do not preach that one must not give assistance to others. The only ethical obligation we are having to ourselves. This doctrine states, as a matter of fact, people are being selfishly motivated and the unselfish actions are impossible. In the case of Mr. Ali, it is said that his mindset bearing ego is the egoism which is psychological in nature. For example, Mr Ali looks into matters which was based upon his own self interest through conducting bribery through the payment made at 5% of the collected revenues. He thinks that he has taken the correct decision but he failed to realize the results of the actions which would not affect him and his organization.

It is regarded as a moral doctrine that one must always act in order to produce the balance at the greatest possible of the good over the wrong as everyone in one point of time is being affected by the actions of their own work. By the means of good, utilitarian happens to understand pleasure or happiness. Therefore, the greatest happiness constitutes a standard which determine whether the action is wrong or right. Both Stuart Mill and Jeremy Bentham developed the theory explicitly in  details. They utilized the standard of utilitarian to criticize and evaluate the political, economical and social centers.

Consequential theory

Jeremy Bentham argued that the principle of utilitarian are right if their actions produce greatest good for a greater number of people. For Bentham, pain and pleasure are typically the types of sensations. Bentham presented a type of calculations on the six criterion in terms of evaluating pleasure and pain exclusively through their duration and intensity. This calculations, what Bentham believes is an objective determination of the morality of conduct by everyone, collectively or individually. Therefore, good is termed on the compliances to rules and codes. As a result, breaking a promise or telling a lie result positive, if it yields better result.

Utilitarianism defined by John Stuart Mill is based on the principles that activities are correct in proportion as they tend to produce happiness. In relation to the idea proposed by Jeremy Bentham, the Mill’s idea focuses on the results or the consequences in order to determine the action’s rightness. Mill however takes a strong ground on the rules and regulations of the morality. He carried an idea that Bentham’s idea about pleasure was too simple to understand and practice. The pleasure of the imagination and intellect, is having a higher rate of value than the sensation of physique. Hence, for Mill, the principle of utility allows consideration as the relative amount of pain and pleasure, about their not only duration and intensity (William H.Shaw 2005,p.52).

For the case of Mr.Ali, his business is suffering from the financial problems and by taking a huge amount of debt, he needs to bring back his business on track. In order to fulfill his goal, he can lay off some of workers in his company, start performing the process of investments with the other firms and increasing the sales efforts of marketing in order to increase revenues. It can be stated that there is a potential for the ethical questions around these choices.

Non consequentialism states about the reasons which are needed to look in the past or in the present. According to the perspective of deontology, the act which is ethically right or wrong depends upon the actions which is being a matter of that one has made. Possibly, the rightness depends on the fact that the other parties being a personal friend of someone. The deontological morals require people to do the correct thing because it is the justified thing to do regardless of the production of the ultimate results (William H.Shaw 2005,p.52).


Immanuel Kant is regarded as the famous deontologist and also regarded as one of the greatest German philosophers. Few thinkers till today would accept the theories proposed by Kant at every point, however his work was greatly influenced by the philosophers who have helped to shape the general ethical culture of the society. In contrast to the theory of utilitarianism and other ideologies, the philosopher Kant says in his theory that most of us unaware about the possible results or else some one is telling lies to their boss in order to gather information regarding what is being immoral (William H.Shaw 2005,p.52).

Immanuel Kant derived his theory on the basis of two categorical imperatives. Kant’s first and foremost categorical imperative seems to encourage the moral actions of people which should not be guided by our inclinations of understanding, but rather we are being guided  by the sense of duty of the law of universe. It requires us to position ourselves in the stage of the party who is receiving. It helps us to deny our self interests and as well require us to judge whether our activity is universally accepted for good or not. The second form of categorical imperative states that people unlike things or objects are the products to be used. It is important to treat people with respect and never using people as the way of ends, the people unlike the objects would be treated in such a way that they would feel rational and it is also significant to help them out in a proper way.

Based on the case of Mr. Ali and Enron, it has been rightly observed that the utilitarian and the egoists allow empirical data or the true circumstances in order to indicate the ethical judgments. According to Kant, reason itself yields moral law. It is not important for us to depends on the empirical based evidences in related to the end results of the familiar situations. In terms of Kant, an absolute moral truth must be rationally consistent and free from the internal based contradictions. For example, it is finally the contradiction to say that the effect do not produce cause. Kant aimed to make sure that the absolutely true moral law would avoid these kinds of contradictions. If Kant can formulate any such rules, he would maintain and at the same time everyone would be obliged to follow the rule without any types of exceptions. Kant’s second categorical imperative which states that we should always act in a way that the rules of our actions attain the position of the universal law.


Therefore, the answer of Kant to the questions “What determines whether the act is right or wrong?” is that the act is ethically right and only if we can, it would become the universal conduct’s law. By the rule, Immanuel means the subjective principle in action, the rule or the principle that person formulates while determining their role of conduct. For example if the contractor of the building Martin promises to install a system of sprinkler in the project, but he is breaking the promise in order to suit his intentions and purposes. This is regarded as a subjective principle, the rule which tames his activities. By willing, the rules and laws, the contractor underestimates the promises in general.

Kant’s categorical based imperative from the point of view of organizational context, it further gives us stronger rules to follow while making the ethical decisions, which do not based on the results or circumstances and that do not give permission to the exceptions of the individual. No matter, what the results may or who does it, some actions are considered to be at faults. Bribery is regarded as an example which is based on the case of Mr.Ali. It does not matter how much good can be derived from his decision making but such misinterpretations based is always regarded wrong, like when Mr.Ali made his own decisions in order to export or supply the medicinal products of his firm which has been amounted to RM20 million to the country China Medicine limited. However, he also has to pay 6% of his revenues collected to the China’s Director, which the latter took it as bribe since the director had achieved the deal for Mr.Ali. Hence, his activities are wrongly based on the theory of Kant because it put emphasized on the absolute dignity and the individual’s values (William H.Shaw 2005,p.52).

One of the important influential theorists who argued that the theory of Kant is W.D.Ross ,who is a British scholar. This person rejected utilitarianism as it is too simple and false to the way we ordinarily think about the moral obligations and morality. The people look at themselves, as Ross pointed out that the light- minded thinkers are under various ethical duties that cannot be decreased to the one and only obligation in order to increase the happiness. Often these obligations grows out of the special bindings into which the people enter or the determined roles that the people undertake. There are various important duties that we can use to indicate what we ought to be

The duties of the prima facie incorporates

  • Fidelity’s duties: It is the duty to keep one’s contracts and promises and to engage oneself in the deceptive mode.
  • Reparation’s duty: It is the duty to fill up the injuries one did to the other.
  • Gratitude’s duty: It is the duty to be grateful to the people
  • Non- injury: It is the duty not to harm others psychologically and philosophically.
  • Justice’s duty: It requires that one act in such a way that one person distributes burdens and benefits fairly.
  • Duty of Self improvement: It is the act to promote one’s goals.
  • Duty of beneficence: It is the duty to do good to others.

At any time, the people of this society likely to be under the major obligations and sometimes these obligations can be conflicted. That is the reason, people have the obligation for someone and also an obligation for someone else. For example: I promised to meet someone on an important matter and now I am hurrying here, then I passed an injured person who was in the dire need to take assistance, if I stop it would become impossible for me to meet the person who is waiting for me eagerly. Then the question arises, what should be done in this dicey situation?  For the answer like this, the philosophers like Ross, there is not a single answer for these kinds of cases. Therefore, it is significant for me to decide among the obligations to choose is what must weigh the moral significance of the promises against the comparative, it is significant to serve the injured person who was in the dire need of help during that situation.

The theory of WD Ross from the point of view of organizational context, gives acknowledgement that the firm own its legitimate goals in order to pursue. However, there are limits stated to the morality’s demands and an organization which fulfills its moral obligations and give respects to its important rights of the individuals is normally free to move wherever it ends and it has profit and public service administration and so forth. In the case of Mr.Ali, his actions are necessary to give stability to the company through   the performance; an agreement is done with the foreign company whose name is China Medicine Limited. But on the basis of one condition of paying back 5% of the collection of revenues allocated to one of the Directors of China Medicine Limited, his actions are considered to be ethically wrong.

Since the year 1970, there was a resurrection of the virtual ethics, an idea that is dated back to Aristotle. Virtue ethics influences on the kinds of abilities that puts us in the position to act ethically, whether after the important deliberation or the quick reactions. Initially it might be identified as the one that influences the moral character or virtues or deontology or that influences the results of the actions. Aristotle defined the virtue as the form of activity for the soul, implying a logical based principle. Aristotle, the historian cum philosopher compared two important dimensions of the human beings the irrational and the rational dimensions. The latter should be considered dominant because it compares the humans from the ones who are not humans. The first idea about the virtue of ethics that it opposes deontology and consequentialism. These two theories are the actual views about what makes the act right. The approach of the virtue ethics focuses on the agent’s qualities as the target for the development as it defined the character of the organization which would finally culminate into the ethically corrected behavior, whether deontology or consequential, which depends on the outlook of the person. This reason might be either deontological or consequential or the combination of both.

The second concept of the ethical virtue, which is perhaps much interesting as well as problematic in terms of both practical and theoretical applications. According to this concept, the determines the wrongness or rightness of the actions, particularly would be rightly acted because it is the act that a person who is virtuous would perform well. It is that which would make the acts right. It is not simple enough for a virtous person to perform the rightful acts  which are independent. It is rather that what a virtuous person does not determine the rightness of the behavior (Damian Grace 2005,p.15).

 By taking into consideration this way, it can be said that Mary who is a virtuous person benevolence are the two of her virtues. Her character is such that she acts benevolently and honestly accordingly. By taking into consideration, if Mary speaks would speak some truth, the public would be harmed and also in order to provide for the welfare of public, she had to lie.

In this particular situation, it has become impossible to spit out truth and provide the welfare of the public stating what it can be done? In this particular account on the virtue ethics, the question arises in the circumstances, Whether Mary can speak lie and remain like an honest woman? Or she keeps on rendering for the benefits for public and still remains a benevolent human. It depends on the particular circumstance by Mary all be herself. It would become incorrect in order to explain the situations where the destructive efforts would yield result which would not give an example of being honest, it would become a fanaticism. It does not provide honest ways, it remains an exception. In this particular situation, a person is not less honest in order to speak out the truth ( Damian Grace 2005,p.16)

In the business, ethics of virtue can be directly implemented by taking into account the virtues of an honest person belonging to business field who are the same as those of the person who is having a nice nature. In the case of Mr.Ali, he unfollowes the theory of virtue ethics. After all, it has been noted that business is the main. Hence, the business people are needed to engage themselves in the areas which are business related since they being representative of their own firms. The firms are made of humans who carry the intellectual to assess the wrongfulness and rightfulness of his own actions. As for example: the person was supposed to take care of his own employees and the company as he is the CEO of his own firm, he is not indulged himself while making decisions which is based on the interest of the person because it would rather bring effects to them such as making the agreements with the foreign countries with the medicinal company belonging to China, having the condition to pay 5% to the directors of its revenue. The director Mr.Michael Chong as being bribed in order to attain the deal. Hence, Mr.Ali is not regarded as person who is having a virtuous nature. It is therefore fair enough to say the concepts of virtue of ethics which determines to see the relation of the moral behavior with a person. In this regard, ethics not only constitutes to what the actions of the people justify, it deals about what types of nature people carry.

b) Crtiically discuss the disadvantages of the utilitarian approaches?

The analysis of cost benefit is way of calculating theory based on utility which was first introduced by Jeremy Bentham. The calculation is rather used to estimate the benefits of direct and indirect and the costs which would produce the actions. Each action gets gives away the cost from the benefits. The greatest sum of the total utility is the better and appropriate decisions which are better. However, the theory of CBA has several disadvantages which are needed to be taken into account.

i)The inaccuracies cost while quantifying and indentifying the benefits and costs: The analysis of Cost benefit required that all the costs and benefits would be identified and the quantification would be done appropriately. However, the errors by human really takes place when they are omitting accidentally certain benefits or costs due to its inability to forecast the relationships which are not directly causal. In addition to this, the uncertainties and ambiguities involved while assigning and quantifying the value of money to the items which are nit intangible gives birth to the cost benefit analysis which are inaccurate in real. These are the two tendencies which give birth to the wrong analysis, which gives birth to the growing risk and not competent decision making. For example, this is a destruction that can be well related to the case of Enron ( Plowman 2011)

ii) Failures of projects: The results from the influences of CBA affects the results of the projects, for example, when the employees report the outcomes to the team of leadership, the team might view the costs more than an estimate but as a real. The team might for more adjustments, depicting the unrealistic aims for the project. Hence, the manager of the project would be facing a task of uphill nature of the costs balancing to conquer the profits which are estimated or ending up with a failed or stalled projects. These results would be far reaching. The total power of the loss which are incurred or the extra time needed to finish the projects might lead to the loss of jobs or the finishing of the closure of a firm (Williams 2012).

iii) The recent cases of CBA was utilized to put down the value of dollar on the life of human. Shall the person would give more weightage to the majority’s happiness, even if the majority group turned out to be evil in nature or just ignore them? It becomes possible to entirely sum up and wage comparison of all the values through the using of the money, which is of common nature. In this context. It is important to take into consideration of the scenario, the story of an OK tedi, through the assumption made that during the early days, when the contamination of water from the mine of New Guinea, Papua’s BHP at Ok tedi and being affected badly, just a few isolated individuals was in the position to think that it would resolve the entire incident through the annihilation of some families and this would be done in such a way that no one would be dared to know the actual happenings of such actions.

By taking into consideration the advantages of doing business, a course of actions has to be taken. A cost benefit of crass would point its face in this direction. Therefore, from this point of view, it would be rather to consider whether this would be moral to do this or not? The answer should always come with a negative response in this case and it would be a no ( Damian Grace 2005,p.27).

Therefore to conclude, it can be stated that moral theory of utilitarianism holds roughly that X is in right position and if X increases its utility strength, where utility is being maximized, it becomes a matter of producing the balances at best possible means of advantages over the costs. Hence, the actions of Mr. Ali are depended on the case which follows the cost benefit analysis which presupposes the truth moral theory which is utilitarian. In fact, it does not do so. Cost Benefit Analysis is a process of organizing the forum of public which expresses respect for the people At present, people in the meeting and other people also, on those behalf of those present who can speak and they are the citizens of the countries which are faraway, future generations and so forth.

c) How Mr.Ali would be advised pertaining to this particular matter?

In the beginning, Mr.Ali is being guided to formulate the terms of the contract or agreements while consulting the members of the company. It has been identified that Mr.Ali has decided to give bribes to the Chinese director of that particular medicine shop and also wage discussion with the other members of the firm, who have come to an agreement in order to pay bribe to the directors of the other company. Secondly, the bribe is also not being recommended in any circumstances and it is not being regarded justified on any grounds (DiStaso and Bortree, 2014).

Secondly, Mr.Ali also recommended that he must not wage any consultation with the company’s one of the directors in the exchange of securing the contract purchasing for his own company. The dealing and consultation with one of the directors would lead to the other personnel believing that Mr.Ali is having with him right now some personal based interests therefore, the advancement of one of the directors silently agrees to pay bribes. In this case, Mr.Ali should wage consultation with the directors and the managers of the other companies in terms of paying a particular share of revenues in exchanging of securing contracts. In this particular case, it would not be taken into consideration about a confidential or private deals by the other members of the company of Mr.Ali and the other companies.

Hence, it is important to mention that paying bribe is not being justified in the world of business. There is no wrong while paying a particular remuneration, price advantages or commission to the other companies in the exchange of securing contracts or deals. However, Mr. Ali should made declaration in the official terms instead of dealing with one of the directors of the company and giving it a name of bribes. He should therefore announce publicly fin terms of denying claims and securing the deals which are ethical in nature.

To sum up, it can be said that, ethics is the study about wrong and right, obligations and duty and as a business student I would say that the Mr.Ali’s actions are ethically wrong after performing a deep research on these theories. The bribe would be pain in terms of purchasing deals, but it becomes rather difficult to judge whether the deal purchase would be achiever or not. 


DiStaso, M.W. and Bortree, D.S., 2012. Multi-method analysis of transparency in social media practices: Survey, interviews and content analysis. Public Relations Review, 38(3), pp.511-514.

Grace, D. and Cohen, S., 1998. Business ethics: Australian problems and cases (pp. 35-6). Melbourne: Oxford University Press.

Shaw, W.H., 1996. Business ethics today: a survey. Journal of Business Ethics, 15(5), pp.489-500.

Sheng, C.L., 2012. A new approach to utilitarianism: A unified utilitarian theory and its application to distributive justice (Vol. 5). Springer Science & Business Media.

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