Last Thursday, the College of Commerce and Finance and the Ethics Committee organized a presentation on the ethical dimensions of Enron by Dr. Ronald Duska of Bryn Mawr College. Duska lectured about the collapse of Enron and Arthur Andersen in addition to a little history on Protagoras, the arch-enemy of Socrates.

Duska appropriately described the sophist Protagoras as an “accumulator” because of a bet Protagoras had made with one of his students of the law. An accumulator is one who forgets core values because of their devotion to accumulation for its own sake. The idea of an accumulator accurately describes the mindset of Enron and Arthur Andersen executives, and it is this mindset which ultimately led to the downfall of both companies.

Some may ask what is wrong with being an accumulator. To answer this question, one must delve into the nature of monetary wealth itself. If we allow ourselves to worship at the altar of accumulation, we destroy real wealth in a sense. When one values accumulation above all things, intangibles such as friendship, love and even happiness are compromised in the pursuit of monetary wealth. Another damaging effect of being an accumulator is a loss of a sense of limits. Somewhat related to the idea of real wealth, by prioritizing accumulation at the top, the consequences of an action are disregarded because of the accumulation of wealth associated with that action.

Enron executives such as Jeff Skilling and Kenneth Lay epitomize the corrosive effects of a single-minded approach to accumulation for its own sake. The use of creative accounting practices related to the recognition of revenues for its special-purpose entities was one of many examples in which executives sacrificed core values for accumulation. When discussing Enron’s accounting practices, one implicitly points the finger at Arthur Andersen as well for their failure to act on their duty as independent auditor of Enron.

Why did Arthur Andersen choose to ignore their duty to report Enron’s fraudulent financial statements? The answer to this question depends on whom you ask. The former executives of Arthur Andersen will claim negligence in not catching the financial discrepancies. I find this explanation difficult, if not impossible, to believe that a Big Five accounting firm, was outwitted by Enron accountants. A more likely explanation concerns the massive fees Enron paid to Andersen for its consulting and auditing services, $55 million in 2000. With this large a figure pouring in from Enron, it is easier to observe how Andersen ignored basic accounting standards in order to accumulate more.

In the wake of the Enron and Andersen fiasco arises new legislation in the form of the Sarbanes-Oxley Act of 2002. This act was created to make it tougher for frauds such as Enron to occur, but more legislation will never completely solve all the problems. Legislation simply challenges lawyers to find the loopholes of a given act or bill. A more likely solution must come from the business world itself in the form of a commitment to ethical decision-making.

Some companies have already altered their mission statements and company creeds to include virtues such as accountability and responsibility. In order to avoid frauds such as Enron and Andersen, the business world must encourage ethical business practices and sound decision-making.