Should a person do something that can help him make profits, but hurt other people in the process? At Enron, the employees only believed in earning more money for the company without ethical bottom lines. Many managers in the company did unethical things to make profits, even though they knew their actions could harm other people. Although many employees and managers, even the CEO, knew the truth, they refused to disclose it, and continued to do unethical transactions. Gradually, the desire for money made people in Enron more and more greedy and ambitious. People are supposed to earn profits in ethical ways. Additionally, if people see someone do unethical things to earn profits, they are supposed to point out his mistakes and tell the truth to this person instead of ignoring it, thus avoiding more similar mistakes later, and their serious consequences.
At Enron, CFO Andrew Fastow, who was hired by Jeffery Skilling, created a project called LJM. An analyst in the movie said that LJM was “black magic. You were pulling some rabbits out of a hat” (Enron: The Smartest Guys in the Room). It was an ironic metaphor to describe Fastow’s actions. Fastow persuaded other companies and banks to invest in Enron, while hiding Enron’s huge debt in other companies. However, investors did not know about the debt, which helped Enron look profitable. Many banks that were willing to cooperate with Enron “took their share of money from the fraud and put it in their pockets” (Enron: The Smartest Guys in the Room). In fact, all the banks knew what they were doing with Enron, and none wanted to point out the ethical mistakes, tell the truth and stop the transactions. Moreover, Skilling stated that “we are hitting troubled times, let’s set up Andy so we can fill the earnings’ holes when we need to.” (Enron: The Smartest Guys in the Room). Although Skilling knew the real facts, he chose to ignore them, and refused to make Fastow stop, even encouraging Fastow to make more.
What would cause Fastow take these actions? “A study found that more creative people tend to be less ethical, because they are better at rationalizing their bad behavior” (Mann, Roberts 34). Fastow fell into this rationalization trap. Thus, he might have thought that he was working on a moral project, because no one told him it was incorrect and unethical. Also, the banks that provided loans to Enron regarded them as normal transactions, because they apparently thought “if I do not do it, someone else will” (Mann, Roberts 34). If people ignore their ethical mistakes, they will likely make more mistakes later, and possibly become more and more greedy. For example, when Fastow defrauded other companies, he also created fake balance sheets, that showed Enron making profits, because he wanted to play up to his boss. The reason seems to be that he idolized Skilling, so he was willing to do everything for Skilling. Therefore, Fastow fell into another ethical trap—following orders, which means “when someone in authority issues orders, even to do something clearly wrong, it is very tempting to comply” (Mann, Roberts 36). He agreed with Skilling’s idea that employees should make as much profit for the company as possible through any possible methods. Then, by deceiving other people in order to make money to Enron, he thought that he was supposed to obey Skilling’s rules, which also revealed that he followed Skilling blindly. After the first time he defrauded people, Fastow continued to deceive others, although he knew that the ways he used were wrong, which caused him to cheat more companies later. However, no one pointed out his mistakes, which caused him to make more mistakes.
Fastow’s action that defrauded other investors, which is against utilitarian ethic theory. John Stuart Mill wrote that “a correct decision is one that maximize overall happiness and minimizes overall pain, thereby producing the greatest net benefit” (Mann, Roberts 30). On the surface, Fastow promised investors to gain profits to maximize their happiness, which attracted them to cooperate with Enron. However, he deceived everyone, which made investors to take risks with him. Maybe they would lose money and commit crimes. At the end, Fastow’s unethical action made Enron in huge debt, and made other investors and companies lose money. As a result, Fastow only considered his own profit and happiness instead of achieving other people’s happiness, even harming other banks and companies, which is opposite to utilitarian theory.
Assuming if he refused to defraud others at the beginning, and Enron would make money through some ethical ways, other investors would not be hurt and face more risks, which could reduce damages. Deontological ethics theory can also be applied, which means “the result of a decision is not as important as the reason for making it” (Mann, Roberts 30). Fastow was supposed to do ethical things when he did business, instead of deceiving others. Although the result of doing ethical transactions sometimes cannot achieve his goals, the consequences are not as important as the process. Since, during the process, he brought some damages to many banks, companies, and other investors, and he could not stop himself to defrauded others. What would cause that? Since, even other people knew Fastow’s action was unethical, they chose to hide the truth instead of telling him to help him correct the mistakes. “A German philosopher Immanuel Kant believed in categorical imperative, which means one should always tell the truth because if everyone lied, the world would become an awful place” (Mann, Roberts 31). In Enron, everyone tried to make more money for the company, but they forgot to be ethical. When Fastow deceived other investors, all the people including employees, mangers and CEO ignored his mistakes, which made Fastow believe that he was right. Furthermore, all the investors cooperating with Enron knew what was going on inside the transactions, but they refused to disclose the truth. Gradually, Fastow defrauded more people, and the debt of Enron became larger, which was too late to compensate for the company’s losses.
Consequently, people cannot make profits based on other’s pain. According to utilitarian ethic theory, people are supposed to do ethical things instead of hurting others in business, which can help people achieve their happiness. Moreover, according to deontological ethics theory, when people see others do unethical things, they need to have courage to tell them and disclose the truth. Otherwise, people will accumulate more ethical mistakes, which may cause more serious consequences. If someone pointed out Fastow’s mistakes, he may stop his unethical actions, which might reduce damages for other people.