Courtesy of University

WCNY, Central New York’s public broadcaster, sponsored a preview of the new PBS series Playing By the Rules: Ethics at Work, which covers the 2001 Enron Scandal.

April 24, 2018

Film Explains the Fall of Enron Corporation

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WCNY, Central New York’s public broadcaster, sponsored a preview of a short film Ask Why Tuesday night in Sage Hall. The film was the third and final installment of the new PBS series Playing By the Rules: Ethics at Work, and the viewing was followed by a discussion regarding the film’s featured case: the Enron Scandal.

In 2001, Enron Corporation, an energy trading company in Texas, collapsed after its accounting fraud scheme was revealed. The scandal resulted in the largest recorded bankruptcy filing in United States history, according to CNN. The accounting fraud hid the company’s financial losses of $700 million and managed to make the company appear to be profitable.

The film includes the testimony of “whistleblower” Sherron Watkins, along with other insider information and investigative evidence.

The preview was scheduled as part of the course NBA 5140: Ethics and Corporate Culture, which is co-taught by Prof. Dana Radcliffe, management, and Prof. Brad Wendel, law.

“Recognizing that this video affords us a similar opportunity for a useful conversation about ethics in business, I open the sessions to the Cornell community, inviting wider participation in the discussion of ethical challenges facing organizations and their leaders,” Radcliffe said.

Wendel led the panel after the film and provided insight into the “checks and balances” in corporations and the psychology behind Enron’s collapse.

Wendel said institutional checks include the internal accounting department and board of directors, along with external analysts, banks during the transactional process, lawyers and councils.

However, he also identified the irony of the system.

“All of these things that are built into the process to make sure that there is no wrongdoing can enable a psychological tendency to overlook wrongdoing,” Wendel said.

Wendel explained herd mentality and discussed its role in the corporate culture of Enron Corporation. In such a cutting-edge and innovative company, according to Wendel and Radcliffe, employees fear to be seen as “in need of help” and “not getting it,” so workers don’t raise questions and therefore ignore accounting loopholes and wrongful directions given by leaders of the company.

“It is truly interesting experience,” said Neely Tang, an off-site public services librarian at Cornell who actively participated in the panel. “I’ve learned so much more about the Enron Scandal and corporate ethics in general.”