Lack of Ethical Behavior in the Cases of Bernie Madoff and Enron

Ethics, in business, refers to moral principles and standards that define acceptable behavior in the world of business. Ethical decisions foster trust among individuals and in business relationships. Recognizing ethical issues is important in the workplace. An ethical issue is an identifiable problem requiring a person or organization to choose from among several actions that may be evaluated as ethical or unethical. When you’re determining is a situation is ethical or not, there are three factors to take into consideration. Individual factors, organizational factors, and opportunity. Individual factors are sets of principles that describe what a person believes are the right way to behave. Organizational factors include the influence of managers, coworkers, and the work group. Opportunity is a set of conditions that punish unfavorable behavior or reward favorable behavior. “Target thrives on competing to win in the marketplace. We compete and negotiate actively, but always with integrity. Taking advantage of anyone by manipulating or concealing

From about 1960 to the 1990’s, Madoff’s business grew like crazy, mainly from some well-known investors and friends. Because of all this Bernie became very successful very fast. This caused him to start getting greedy. In the 1990’s Bernard L. Madoff Investment Securities began conducting illegal acts of fraud, Madoff started an illegal money-management business, promising his investors consistent returns. Investors were so interested in the high returns, that no one questioned Madoff or his strategy. In 2008, investors began requesting payouts for their investments and Madoff started to become very desperate for new funds. His strategy began to unravel and the truth of his actions started to come out, shocking many people. This case blew up like crazy and once investigators started looking into Madoff’s business they discovered all Madoff was doing was running a Ponzi scheme. He would take funds from new investors, and use that to pay off the older investors. While doing this Bernie was also pocketing a large portion of the money, causing this to be one of the biggest Ponzi schemes in

As with much of Enron, their outward appearance did not match what was really going on inside the company. Enron ended up cultivating their own demise for bankruptcy by how they ran their company. This corrupt corporate culture was a place whose employees threw ethical responsibility to the wind if it meant financial gain. At Enron, the employees were motivated by a very “cut-throat” culture. If an employee didn’t perform well enough, they would simply be replaced by someone who could. “The company’s culture had profound effects on the ethics of its employees” (Sims, pg.243). Like a parent to their children, when the executives of a company pursue unethical financial means, it sets a certain tone for their employees and even the market of the company. As mentioned before, Enron had a very “cut-throat” attitude in regards to their employees. This also became one Enron’s main ethical falling points. According to the class text, “employees were rated every six months, with those ranked in the bottom 20 percent forced to leave” (Ferrell, 2017, pg. 287). This system which pits employees against each other rather than having them work together will create a workplace of dishonesty and a recipe of disaster for the company. This coupled with the objective of financial growth, creates a very dim opportunity for any ethical culture. “The entire cultural framework of Enron not only allowed unethical behavior to flourish,

Bernie Madoff is attributable for having one of the biggest frauds in history; he was responsible for losing billions of dollars of investors’ money for over twenty years. Known as one of the fathers of the NASDAQ, he gained credibility early and was able to prey on different affluent groups to gain billions of dollars for ‘trading’ investments. Markopolos the whistleblower of the Madoff case saw this scheme from the beginning and attempted to warn the SEC, which proved to be unsuccessful.

Even during these early days in business Mr. Madoff practiced some shady business ethics. Mr. Madoff began to have his father-in-law “manage” the new clients that he brought to invest with Bernie (PBS.org, 2009). Bernie was also not licensed as an investment advisor for the number of clients he had grown to serve. State and Federal securities regulation during the time period was slack and Mr. Madoff was just one of many advisors without proper licensing.

Business ethics refers to the consideration of moral decisions and responsibilities in the process of operating a business. Business ethics, practiced throughout the deepest layers of a company, become the heart and soul of the company 's culture and can mean the difference between success and failure. Values drive behavior and therefore need to be consciously stated, but they also need to be affirmed by actions. Ethical business environments are created with foundations of integrity, accountability and commitment.

Bernie Madoff was successful for so long because he kept a high level of secrecy in his firm. If a question or a concern was brought up, he instead focused on his many years of success. In an interview with Frontline, Michael Bienes, a CPA who fed Madoff clients during his early years, explained why so many people never questioned Bernie Madoff. When asked a question, Madoff would answer in a way to confuse even an expert. As was the sentiment of many who worked with

Business Ethics are defined as “moral principles that guide the way a business behaves” (Businesscasestudies, 2017). In order for any business or individual to act in an ethical

Ethical behavior, in a general sense, is a definition of moral behavior in regards to lawfulness, societal standards, and things of that nature. In the business world, ethics commonly refer to acceptable and unacceptable business practices within the workplace, and all other related environments. The acceptance of colleges regardless of ethnicity, gender, and beliefs, as well as truthfulness and honesty in relation to finances within the company are examples of ideal ethical business conducts. Unethical business behavior would include manipulating procedures based on bias or discrimination, engaging in activities that promote political gain, as well as blatant fabrication of monetary factors within the company and “can affect

Imagine one day owning thousands of shares in a multi-billion-dollar company worth million to then wake up the next to find out those shares are now worthless. This was the sad truth for many people and employees invested into the big power giant known as Enron in the early 2000s. Enron was a company formed in a merger that was a huge supplier of natural gas and electricity. Enron executives encouraged their accounting team to manipulate their financial statements to make their company performance look better than they actually were. As a result of this constant illegal practice, Enron declared bankruptcy in December 2001 after reporting a 3rd quarter loss of $618 million that sent their stock value plummeting (Corrupt Crimes). Former CEOs

Unfortunately, scandals like Enron are not isolated incidents and the last decade has offered Americans a disheartening perspective with comparable scandals like that of WorldCom and Tyco, Sunbeam, Global Crossing and many more. Companies have a concrete responsibility not just to their investors but to society as a whole to have practices which deter corporate greed and looting and which actively and effectively work to prevent such things from happening. This

What is right or wrong? People base their values of right and wrong on what they have learned from their experiences (Ferrell, Fraedrich, & Ferrell, 2018). What one person sees as wrong, may be a normal for another. Most people are taught to work hard, save money, and invest for a future retirement. However, when it comes to money, some people lose all principles and standards of behavior. There were several ethical issues in the Madoff case. They include: stealing, cheating, lying, misrepresentation, and deliberate deception. Madoff used the Ponzi scheme or the money pyramid to make his money. In the Ponzi scheme, money was taken from new investors and given to existing customers as earning without being invested. Was this right or wrong? Throughout this case study ethical concerns can be seen on both sides, the investors and Madoff’s.

Enron was founded in 1985 through the merger of Houston Natural Gas and Internorth (a natural gas company based in Nebraska). Enron quickly became the major energy and petrochemical commodities trader under the leadership of its chairman Kenneth Lay. Enron moved its operations online, boasting the largest online trading exchange in 1999, as one of the key market makers in natural gas, electricity, crude oil, petrochemicals and plastics. Enron also diversified into various businesses such as coal, shipping, steel & metals, pulp & paper, and even into such commodities as weather and credit derivatives. Enron was reporting revenues of $80 billion and profits of $1 billion at its peak. It was selected by Fortune as America’s most innovative company for six consecutive years.

In their personal and professional lives, people can and, unfortunately, sometimes do go against their moral and ethical standards. Ethical standards are what it means to be a good person, the social rules that govern our behavior. Ethics in business is essentially the study of what constitutes the right and wrong or the good or bad behavior in the workplace environment. A business is an organization whose objective is to provide goods or services for profit. The organization has a group of people that work together to achieve a common purpose. The moral challenges that these men and women face each day along with a whole range of problems that could occur, are why ethics plays such an important

Enron Corporation is one of the companies in the United States suffered from significant losses. Due to the embezzlement of money, the company filed bankruptcy in December 2001 with liability of more than 50 billion USD. The reason of failure of Enron case are related to one of the staff, Jeffrey Skilling who formed the executive staff to find and use the void that exists in accounting, special purpose entities, and production of precise financial statements which can hide billions of debt consequential from the project and agreement that the company failed.