Ethic Dilemma

The Fall of the Andersens

• Andersen was fined $7 million by the Securities and Exchange Commission (SEC) for overstating the earnings of Waste Management Corporation.

• Enron was under the investigation of SEC for dubious accounting figures.

• Following the fall of Enron, Arthur Andersen was subjected to investigation by the regulatory boards as well.

The significant stakeholders are: major clients such as Enron, WorldCom, Sunbeam and HIH, Australia, Fred Andersen, investors and 85,000 employees in Arthur Andersen.

Normative issues for the involved parties:

• The ethnics which was brought forward by the founder was abandoned by the last successor of Andersen as they doctored the earning figures of clients and failing to comply with the regulatory boards.

• Enron- executives are found to have tampered with the accounting figures

• Employees of Andersen shredded questionable documents belonging to Enron.

Normative principles in this case:

• Under Deontological Ethics, The Principle of Honesty