ENRONIntroductionEnron was the country's largest trader and distributor of electricity and natural gas. Its main business was purchasing energy at a negotiated price and subsequently selling the energy when prices increased. As an energy intermediary, Enron provided a service by allowing producers to negotiate a certain price while Enron took the risk that prices would fall below the price of the energy purchased. Energy buyers also benefited because Enron was able to guarantee the energy supply. In 2000, Enron was number five on the Fortune 500. What happened to the company that was among the most admired for vision and quality thinking? Enron was the company that held virtual assets and not real assets, such as power plants, which were capital incentives with low returns and ongoing debt. The market decline that began in 2000 exposed the financial structure on which Enron was built, ultimately forcing the company into bankruptcy. The main reason was special purpose companies. According to the law, a company can create SPEs for a particular purpose. The debt of the SPE is recorded in the accounting books of the creator company. However, it could be transferred to the SPE if an independent third party purchased a minimum 3% stake in the SPE. This financial structure became Enron's favorite; created more than 900 SPEs. During the 1990s Enron created special entities to move its debt off its balance sheet. Enron created businesses, sometimes joint ventures or partnerships. To capitalize on these assets, Enron sometimes found investors; these were Enron executives or friends. Sometimes there were no “investments”. The actual structure violated SPE statutory requirements. Enron leveraged its working relationship with Merrill Lynch… middle of paper… missions need someone from outside the company, consistently asking good questions to avoid ethical situations. Another important duty for board members is to understand the director's activities to avoid conflicts of interest. The main area of ​​concern is investigating reports of ethical misconduct by administrators. These investigations can be serious matters requiring accuracy and tact. Even if initial incidents seem trivial, investigations can uncover serious ethical lapses. The board may use external investigators as part of the corporate governance program to investigate all dealings and conduct of directors. References Bohlman, H. M. (2005). Legal ethics and the international business environment. Southwestern Thomson.Scharff, M. (2005). WorldCom: a failure of moral and ethical values. Journal of Applied Management and Entrepreneurship .