Custom «Jeffrey Skilling of Enron» Essay Paper Sample

During the period between 1996 and 2001 Jeffrey Skilling occupied the post of the Chief Operating Officer at Enron (Matulich & Curry, 2008). However, his figure became notorious not due to his professional achievements but due to the one of the most famous and sophisticated corporate frauds. It would be fair to call Skilling the critical figure in the history of corporate fraud in America. Whether Skilling was the major cause of Enron’s collapse is not clear but he has obviously contributed into its unethical conduct. As a result, it is more than important to review Skilling’s unethical decisions through the prism of different ethical theories.

Jeffrey Skilling of Enron

            Introduction

            During the period between 1996 and 2001 Jeffrey Skilling occupied the post of the Chief Operating Officer at Enron (Matulich & Curry, 2008). However, his figure became notorious not due to his professional achievements but due to the one of the most famous and sophisticated corporate frauds. It would be fair to call Skilling the critical figure in the history of corporate fraud in America. Whether Skilling was the major cause of Enron’s collapse is not clear but he has obviously contributed into its unethical conduct. As a result, it is more than important to review Skilling’s unethical decisions through the prism of different ethical theories.

            Certainly, it is difficult to deny that Jeffrey Skilling exemplifies the way unethical behaviors in business lead companies to tragic corporate failures. To some extent, Jeffrey Skilling is guilty of breaking the basic principles of ethics while playing with the rules and standards of SEC and accounting. For several years Skilling tolerated such behaviors within Enron and did not seem willing to stop them. Simultaneously, it is due to legal and corporate ambiguity that such fraud became possible.  “Much of the company’s behavior falls into the shadowy space of legal ambiguity where the letter of law and regulatory guidelines are not always a reliable compass, and where the spirit of the law is open to interpretation” (Salter, 2009). In terms of social responsibility and general ethics, Enron in general and Skilling in particular failed to identify the boundaries of their risky games in the market. Where social responsibility and codes of ethical conduct had to prevent the development and expansion of risky behaviors, Skilling, on the contrary sought to create an atmosphere of complete deregulation and to use it for achieving his illegal (or partially legal) purposes (Clark, 2009). With the growing deregulation of energy markets and with the implementation of new rules Enron was given unlimited opportunities for fraud, as a result, Enron’s failure was the result of both Skilling’s imagination and ambiguous legal frameworks, in which companies had to operate.

            It is more than interesting to review Skilling’s actions from the viewpoint of consequentialist theories. Here, utilitarianism may shed the light onto the most controversial ethical issues at hand. To begin with, “in utilitarianism, there is no question of concentrating on utility only amongst a few people. The aim, after all, is to achieve the greatest happiness of the greatest number” (Jones, Parker & Bos, 2005). However, it is not enough to achieve greatest happiness for everyone, for utilitarianism usually implies that every individual has equal right to get his share of pleasure. Thus, the natural question is in whether Skilling was pursuing the principles of greatest happiness for everyone, and whom we should consider as “everyone”. On the one hand, those working with Skilling in the process of developing and implementing their fraudulent schemes certainly sought to promote their own greatest happiness, and in this context their actions might have been justified; but when it comes to stakeholders, it is clear that their rights for equal profits were seriously violated. Unfortunately, the current state of law does not provide a single and clear definition of “honest services” in business; and in terms of utilitarianism, Skilling could refer to his most benevolent intentions which unfortunately did not lead to any positive outcomes. Still, Skilling has broken a whole set of legal and moral standards, and from the Kantian deontology perspective, his actions can hardly be considered ethical.

            Kantian deontology is concentrated on motives, rules, and morality of principles which individuals and organizations are to follow. In business, however, morality and the need to follow the rules of corporate conduct often conflicts profitability requirements. Given that “Kant takes motive as a key element in deciding about the moral worthiness of a particular act but – and this is very important – he never suggests that we are able to perfectly know our own motives” (Jones, Parker & Bos, 2005). This was not the case of Skilling, and he clearly well realized what principles and rules he had to violate in order to become rich. Not only did Skilling break a number of laws and accounting standards; he violated the principles of fairness with regard to stakeholders, leaving them without any chance to recover their funds. He might have been unaware of the specific consequences to which his actions could lead, but he was aware of the fact that he was crossing the boundaries of appropriate performance in the corporate world. Similar concerns arise in connection with Skilling’s behavior, when reviewed through the prism of virtue ethics.

            The roots of humanistic ethics lie in the Aristotelian vision of virtue as “the fulfillment of task and the realization of specific capabilities or possibilities. […] Virtue is only attainable if it is embedded in a particular formation of habits that allow the person to frequently engage in practical deliberation as well as constant attempt to tame the less rational parts of the soul” (Jones, Parker & Bos, 2005). It should also be noted, that Aristotle and his understanding of virtue are integrally linked to the social context within which a person is bound to exist; as a result, Skilling could easily justify his actions by shifting the burden of his immoral guilt on unfavorable social and legal contexts. In reality though, Aristotelian ethics would not give Skilling a single chance to review his ideals, as far as virtue implies the need to see and share the viewpoints of others and to promote their wellbeing. For Enron, taking into account the visions and opinions of stakeholders would mean to subject their fraudulent schemes to the risks of failure. By no means did Skilling promote virtue, but on the contrary made everything possible to limit the scope of virtuous intentions as those, which could not promote profitability of business in short and long run.

            It is difficult to choose one single theory which Jeffrey Skilling violated in his pursuit for profits. Obviously, his actions have produced so many irreversible effects on markets and citizens that each ethical theory draws on a different aspect of Enron’s ethical conflict. From the viewpoint of ethical codes, Skilling has forgotten about the principles of fairness and honesty in financial and accounting operations. If reviewed from the social responsibility perspective, Skilling’s ideas and strategies did not consider stakeholders’ interests, did not avoid causing social and financial, as well as moral harm; did not solve social issues and did not maximize stakeholders’ profits. In this context, Enron stands out as the bright example of the way companies operate in a social responsibility vacuum. Now, with the advent of the new corporate age, Enron looks like an unsuccessful attempt to deny the relevance of ambiguous laws and morally acceptable ethical rules. It is a good lesson to those, who seek fast profits for the sake of ethics and morality in business.

            Conclusion

            Jeffrey Skilling might have pursued the principles of the greatest good for a limited group of corporate players, but he violated a whole set of basic legal and ethical rules; did not promote virtuous intentions; and has created a kind of a social responsibility vacuum. It is obvious that none of the rules and standards of business could work to change Enron’s attitudes to its corporate activity, and now as several years have passed it is evident that unethical conduct in business cannot serve the source of long-term profits.