1. How Enron Could Have Been Structured To Avoid the Scandal

Enron was one of the best companies in the areas of communication, energy and natural gas. This company had an outstanding performance in terms of profits, but corrupt activities caused this company to lose their success. However, there are different ways that could have been done to avoid these events from happening.

First, laws and regulations have allowed providing consulting services to a company and then turning around and providing an audited report about the financial results of these consulting activities. Secondly the company hired and payed its own auditors. This again is a conflict of interest built into our legal system because the auditor has a reason why he or she cannot issue a fault-finding report on the company that is paying him or her. The auditors should have come from other companies. Third, this company was allowed to manage its employee's pension funds.  This again made the company have a reason of using these funds in ways that advantaged the company but on the other hand, disadvantaged the employees. Enron had codes of ethics that prohibited its managers and executives from being involved in another business entity that did business with it. However, these codes of ethics were voluntary and could be set aside by the board of directors. The legal structure nowadays allows managers to enter these arrangements, which form a divergence of interest. The managers and executives, of course, have a fiduciary duty to act in the best interest of the company and its shareholders, but the law leaves considerable discretion to managers and executives to exercise their own business judgment about what is in the best interests of the company therefore, giving room to corruption loopholes.

 However, there are different suggestions on hoe to reduce business conflicts like those that happened at the Enron scandal. The best recommendation is by creating an ethics committee which will help the company to avoid and prevent these unethical situations from happening. An ethical committee would be able to observe the decisions of a business. In addition, the company would be in a position to hire and research on members of the company in order to give work to people with strong ethical standards. It would also be in a position to monitor financial administrations of the company. Financial areas of a company must be run ethically in order to avoid these scandals from occurring. Ensuring strong ethical foundation through the use of an ethics committee is a helpful tool for any company. (Li, 2010) (A.J. Schuler, 2007)

2. Whether Enron's Officers Acted within the Scope of Their Authority.

They didn't. The scope of corporate authority is limited by what is legal.  If one crosses the line and does something illegal, then he is no longer acting within the scope of corporate authority. In the law of agency, those acts are not proper for the accomplishment of the goal of the agency, including not only the actual authorization conferred upon the agent by the company's principal but also that which apparently was delegated to the agent.

3. Describe the Corporate Culture at Enron

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Enron's corporate culture is well known for its risk taking, aggressive growth rate and entrepreneurship ideas. These were positive values however; they were not balanced with the corporate integrity and the creation of customer and the shareholders value. Since its corporate values were not well grounded, it concentrated on price per share of common stock, but even its positive values became a liability. Its corporate culture also embraced the value of maximum size, which is not much of a value, but a way of achieving a large mission. This size domination made the company prone to bullying whoever questioned its balance sheet practices. All of this was preventable, long ago, but Enron failed to create a sustainably successful corporate culture that included values such as customer service, or maximizing customer loyalty and satisfaction, which would have balanced the company's overemphasis on pure, short-term stock price. Even more important, Enron's corporate culture had evolved so that it only paid cosmetic attention to integrity. That was the responsibility of the Board of Directors and the executive officers of the company. (Kurt, 2005)    

4. Alleged Irregularities In The Actions Between Sellers and Securities of Enron.

Former Enron chief financial officer Andy Fastow, testimony revealed that Enron banks were not innocent bystanders in the scandal but that these financial organizations were the masterminds behind the scheme to defraud investors. The banks, which were named, in this scandal include the largest and important such as Barclays, Credit Suisse First Boston, Merrill Lynch, Deutsche Bank, Royal Bank of Canada and Toronto Dominion. However, these banks are yet to agree their participation in the scheme and, they now face global financial exposure for their actions in the Enron Scandal. There is clear evidence showing that the banks, motivated by business greed and individual profit, knowingly and actively helped to engineer Enron's efforts to trick investors out of billions of dollars at almost every step in the company's deceitful scheme.

The evidence reveals that, beginning as far back as 1996, the banks deliberately worked together with Enron to forge the company's financial statements and con investors through phony financial deals which were illegal and could not be noticed. Enron didn't tell these banks what to do - but, on the other hand, these banks advised Enron on how to deal with the company's significant financial changes. When Enron had difficulty meeting its reported earnings targets and needed to generate more cash flow to maintain its credit ratings, the Banks helped design the fraudulent and deceptive deals that led to the collapse of the company's stock and hurt tens of thousands of investors across the country.

Fastow's information together with banks reports revealed that banks provided the financial tools for Enron officials to deceive investors, while Enron paid off the banks with access to special deals. His evidence and documentaries shows that the bank and the bank were involved in three main bogus deals. There were deals that involved generating false earnings through fraud deals and fake companies, which allowed Enron's stock to continue to rise. The hiding of debt through the creation of shell companies where bad Enron assets could be parked so they would not show up on the books which prevented the market from making a truthful evaluation of the company's financial health. And transactions that used loans disguised to look like investments that were reported as cash flow rather than debt - thereby hiding the true nature of Enron's finances.

5. Whether or Not Enron Was Liable For the Actions of Its Agents and Employees

Corporations and companies cannot do anything for their own since they are only legal entities and not individuals. They require agents and employees who act on their behalf. Enron's action is therefore, legible for the actions of its employees and can be prosecuted in a court of law since their actions led to a crime. Action and duties of the employees are directly connected to the company since the company gave orders. Fraud on behalf of the company by an employee can lead to charges for both the employee and the corporation. So Enron is liable for the actions of its agents and employees.

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