Enron Corp. was an energy company that was incorporated in Oregon in 1985, with its principal executive offices located in Houston, Texas. By the end of 2001, Enron Corp. was the world's largest energy company, holding \(25 \%\) of all of the world's energy trading contracts. \({ }^{383}\) Enron's own public relations materials described it as "one of the world's leading electricity, natural gas, and communications companies" that "markets electricity and natural gas, delivers physical commodities and financial and risk management services to companies around the world, and has developed an intelligent network platform to facilitate online business." 384 Enron was also one of the world's most admired corporations, holding a consistent place in Fortune magazine's 100 best companies to work for. The sign in the lobby of Enron's headquarters read, "WORLD'S LEADING COMPANY".385 On the wall in Enron's lobby at its Houston headquarters were the company's values: Integrity, Communication, Respect, Excellence. Employees at Enron's headquarters had access to an on-site health club, subsidized Starbucks coffee, concierge service that included massages, and car washes, all for free \({ }^{386}\) Those employees with Enron Broadband received free Palm Pilots, free cell phones, and free wireless laptops (unique at that time). \({ }^{387}\) In November 2001, a week following credit agencies' downgrading of its debt to "junk" grade, Enron filed for bankruptcy. At that time, it was the largest bankruptcy ( \(\$ 62\) billion) in the history of the United States. \({ }^{388}\) Since then, it has dropped and is now just one of the 10 largest bankruptcies in the history of the United States....................

Discussion Questions 1. Can you see that Enron broke any laws? Andrew Fastow testified at the Lay and Skilling trial as follows: "A significant number of senior management participated in this activity to misrepresent our company. And we all benefited financially from this at the expense of others. And I have come to grips with this. That, in my mind, was stealing." 462 Is Mr. Fastow correct? Was it stealing? How should Fastow's' relationships with Enron's partially owned subsidiaries have been handled in terms of disclosure.
2. Do you think that Enron's financial reports gave a false impression? Does it matter that most investors in Enron were relatively sophisticated financial institutions? What about the employees' ownership of stock and their \(401(k)\) plans?

3. What questions could the officers of Enron have used to evaluate the wisdom and ethics of their decisions on the off-the-book entities and markto-market accounting? Be sure to apply the various models you have learned.
4. Did Mr. Fastow have a conflict of interest?
5. What elements for your personal credo can you take away from the following testimony from David Delainey and Andrew Fastow? As you think about this question, consider the following from their testimony at the Skilling and Lay trial.
When asked why he did not raise the issue or simply walk away, Mr. Delainey responded, "I wish on my kids' lives I would have stepped up and walked away from the table that day. "463 Mr. Fastow had the following exchange with Daniel Petrocelli, Mr. Skilling's lawyer (Mr. Petrocelli represented the Brown and Goldman families in their civil suit against 0. J. Simpson): Petrocelli: To do those things, you must be consumed with insatiable greed. Is that fair to say? Fastow: I believe I was very greedy and that I lost my moral compass. \({ }^{464}\)
Fastow also testified as follows: "My actions caused my wife to go to prison." 465 Defense attorneys, being the capable souls that they are, extracted even more: "I feel like I've taken a lot of blame for Enron these past few days. It's not relevant to me whether Mr. Skilling's or Mr. Lay's names are on that page... I'm ashamed of the past. What they write about the past I can't affect. I want to focus on the future. Even after being caught, it took me awhile to come to grips with what I'd done.... I've destroyed my life. All I can do is ask for forgiveness and be the best person I can be. \({ }^{" 466} \mathrm{Mr}\). Fastow also said, "I have asked my family, my friends, and my community for forgiveness. I've agreed to pay a terrible penalty for it. It's an awful thing that I did, and it's shameful. But I wasn't thinking that at the time." \({ }^{467}\)
Mr. Fastow has quoted Herman Melville's Moby Dick as to why Ishmael let himself be dragged into the doomed ship by Captain Ahab as a way of explaining what he did and for so long. "Ishmael said, 'But when a man suspects any wrong, it sometimes happens that if he be already involved in the matter, he insensibly strives to cover up his suspicions even from himself. And much this way it was with me. I said nothing, and tried to think nothing.'" What does he mean by this quote? Apply one of the categories of ethical personalities to his behavior? Amoral technician?
6. Was Ms. Watkins a whistleblower? Discuss the timing of her disclosures. Compare and contrast her behavior with Paula Reiker's. Paula H. Reiker, the former manager of investor relations for Enron, was paid \(\$ 5\) million between 2000 and 2001. She testified that she was aware during teleconferences that the numbers being reported were inaccurate. Upon cross-examination she was asked why she didn't speak up, as Mr. Petrocelli queried, "Why didn't you just quit?" Her response: "I considered it on a number of occasions. I was very well compensated. I didn't have the nerve to quit." \({ }^{4688}\) Did she make the right decision?