Enron pt 2

Date: July 11, 2008
Time: 11:15 PM
Place: Kitchen

Management’s complacency with unethical behavior was the root of Enron’s many problems. Its leadership was not risk-averse. Investments and projects were undertaken in areas where Enron had no expertise. As these ventures failed, Enron took measures to hide their losses.
Enron’s Chairman Kenneth Lay, CEO Jeffrey Skilling, CFO Andrew Fastow, Chief Risk Officer Richard Buy, Chief Accounting Officer Richard Causey, and the board of directors shared many leadership styles and attributes which facilitated its collapse. Expectations were set very high; looking great for Wall Street dominated many decisions. Although Enron’s leadership was characterized by desirable physical and intellectual characteristics, their personal and ethical traits were lacking. Their leadership styles were transformational but also laissez-faire. Examples of conflicts of interest between Enron’s employees and its many partnerships and transactions were allowed by the board. Management often engaged in “transfer pricing” (Hays, 2006). They sold assets of Enron at prices below market value to companies in which they had partial ownership. There seemed to be no controlling or oversight. The Board was pretty much hands-off. They were not really informed nor did they understand the types of transactions Enron was engaging in. Proposals put forth by management were quickly approved.