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The enron case
- Enron hardly seems appropriate for a module in research ethics. It has been presented as a cautionary tale of what happens to Harvard Business School Graduates who give smart alec remarks during student interviews. (Jeffrey Skilling, when asked if he was smart, supposedly replied, "I am f___ing smart." The moral of this cautionary tale: don’t be arrogant and hubristic or you will be brought down and humbled like Enron’s “smartest guys in the room.”)
- This is good advice but it only gets us started toward a more profound appreciation of the moral complexity of this case. For example, Malcolm Gladwel distinguishes between a puzzle and a mystery and asks which one applies to Enron.
- A puzzle requires more information if it is to be solved. If a puzzle cannot be solved, then it is because someone is withholding crucial information. In determining Skilling's punishment and jail sentence, many testified that Skilling withheld crucial financial information from them pertinent to Enron's pending failure. He sold Enron stock but they didn't because they didn't have the inside perspective. They could have solved the Enron puzzle (and sold their stock before it crashed) had they been able to access the same information available to Skilling.
- But if Enron is a mystery, and Gladwell more than hints at this possibility, then it doesn't require more information to be solved. Rather, it requires intelligent and skilled financial experts to study, structure and frame the information already out and turn it into a coherent story. (Intelligence experts are trained to do this by interpreting the chatter that goes on between terrorists to try to build a picture of whether they are planning an attack.) The students at Cornell university studied information publicly available on Enron. On the basis of this (and not cloak-and-dagger investigative reporting), they recommend selling Enron stock because it was overvalued. For them Enron was a mystery. All it needed was for someone to pour over all the information available and tell a coherent story.
- This is important to research ethics because much of research in business falls in one or the other of these categories. Furthermore, responsibility is assigned differently depending on whether the situation offers a puzzle or a mystery. If Enron was a puzzle, then Skilling, Lay, and Fastow were likely guilty of a cover-up. If Enron was a mystery, then the blame falls on those who should have been able to put together the story of Enron's failure based on the information already available.
Enron exercise
- Give an argument on why the Enron Case is primarily a puzzle. How did Skilling, Fastow, Lay go about covering up the vital information?
- Given an argument on why the Enron is primarily a mystery. If the information was already out there, why were financial experts unable to see it? What was the story they should have put together to make sense of the information already publicized?
- In working toward your answers to 1 or 2, consider whether energy futures, mark-to-market accounting, and Special Purpose Entities were financial devices or tools that were be put to good use. (Could they be treated, for example, as value-neutral technologies?)
Source:
OpenStax, Graduate education in research ethics for scientists and engineers. OpenStax CNX. Dec 14, 2009 Download for free at http://cnx.org/content/col10408/1.3
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