Former Chief Financial Officer (CFO) of Enron Corporation Andrew Fastow is coming to Miami University Monday, April 21 to speak on the topic of accounting rules versus moral principles.
Enron Corp. was an energy, financial services and commodities company based in Houston, Texas. In late 2001, it filed for bankruptcy after it was revealed a complex accounting fraud scheme had allowed it to overstate its earnings by several hundred million dollars. Both Enron and auditing firm Arther Andersen LLP were implicated in the scandal.
Fastow pled guilty to conspiracy. He gave up $24 million and spent more than five years in jail for securities fraud.
Enron was not alone. In 2002, long-distance phone company WorldCom filed bankruptcy following a similar accounting scandal that buried WorldCom’s deteriorating financial state. Following scandals like Enron and WorldCom, the Sarbanes-Oxley Act was passed to further regulate financial practice and reporting as well as corporate governance to prevent another Enron or WorldCom.
International Business Insights, Investment Banking Club and Delta Sigma Pi are the organizations planning the event April 21. If you think it seems oxymoronic that Fastow is speaking on ethics, you are not the only one. International Business Insights co-president Michael Mitrakos said Farmer School of Business (FSB) declined to sponsor the event, but that it is important for students to hear not only the positive side of ethics but the consequences of ethical failures.
“[FSB has] been trying to bring in speakers to accentuate the positive side of ethics, which this speaker would go against,” Mitrakos said. “One of our members has actually seen him speak. It was definitely controversial, but he said it was fascinating to hear his viewpoint and what areas are still issues today.”
Mitrakos said although Fastow will not be speaking directly on Enron, he will be answering questions related to the 2001 scandal.
“He will be speaking on rules versus principles. He won’t be speaking on Enron specifically, but other examples similar to Enron in regards to accounting rules which gave the opportunity for [companies] to make those mistakes,” Mitrakos said. “There’s also a 45-minute Q&A afterward, so I think that’s going to be a huge part of it for students. In his main speech he won’t talk about Enron, but in the Q&A he’ll answer most of the questions.”
Digital Strategist for International Business Insights Mike Flores said there is a difference between complying with the law and upholding moral values.
“Generally [Fastow] tries to help students understand the difference between simply following the rules and keeping ethical principles,” Flores said.
If you want to submit a question for Fastow, the MU student organizations sponsoring the event are taking questions from students here. During the presentation, students can also submit questions on Twitter with the hashtag #AskFastow.
Former Vice President of Finance for Delta Sigma Pi Sam Korach served on the committee that planned and marketed the speaking event. He said the goal of the event is for students to learn from the effects of poor ethical decision-making.
“I think it’s important for people to get real insights,” Korach said. “A lot of times you focus on the good sides of business, but there are also some bad things that happen. Certainly [Fastow’s] been on the opposite side of ethical decision making. Bringing light to Enron or WorldCom is important. The end goal is that people learn from this.”
The event will be at 7 p.m. in Taylor Auditorium in the Farmer School of Business.