Английский язык. Практический курс для решения бизнес-задач - Нина Пусенкова

6. the act of pledging, obligating, or engaging oneself

7. to equalize or counterbalance; to compensate

8. a process instituted in a court of justice for the enforcement or protection of a right or claim

9. the innermost or the most essential part of anything

10. accumulation of stores or materials beforehand; a stipulation

Exercise 3. Name Enron’s stakeholders and describe how they were affected by its collapse.

Exercise 4. Write speeches for the prosecutor and counsel for defense that they could used during the Enron trial.

Exercise 5*. Fill in the blanks using terms given below.

The Pride and the Fall of Enron

While Enron grew rapidly through the 1990s, some of the worst manifestations of its culture – obsessions with……… the stock price and exotic accounting – were also growing. Though the corporation’s character flaws can be traced to its earliest days, they flourished under top executive Jeff Skilling. He didn’t act in a vacuum. Enron had a distracted, hands-off chairman, a compliant…… of directors and an impotent……. of accountants, auditors and lawyers. But it was Skilling’s relentless push for creativity and……… that fostered a growth-at-any-cost culture, drowning out voices of caution and overriding all……….

The creative aggressiveness Skilling deemed essential to dominating new markets went untempered by good business sense or……. discipline. The same……. lauded as key to the company’s future were also key to its collapse. «It was all about taking……. now and worrying about the details later,» said one former Enron deal maker. «The Enron system was just ripe for………»

A key component of Enron’s culture was…… a certain kind of person. In the late 1990s, the…….. department began giving…….. a new set of «cheat sheets» on what to look for in……. candidates. «It was not your typical, hard-working, extracurricular-activities type of student. It was a sharp-dressing extrovert, someone who would fit in as a ruthless trader. We weren’t looking for softies.»

Drawn from Harvard, Yale, Princeton, Rice, and other leading universities, the new hires were smart, even brilliant, but did not prove to be good…… «If you keep telling people how smart they are, after awhile they start to think they have nothing else they need to learn,» said one former manager, «It was such a high-achievement…….. that there wasn’t close……. to make sure people learned the……. of good management.»

To…….. his particular………, Skilling encouraged all…… to use an………. process. That process – «rank and yank,» as it came to be called – came to epitomize the company culture. Employees spent about two weeks annually……. fellow employees’ value to the company, from 1 down to 5. The process could be brutal, and often led to employees……… their peers to make themselves look better. And each……. was forced to rank a fifth of the employees as 5s.

«We hired the best and brightest people, but now they were telling us we had to arbitrarily…….. 20% of them. Why would we want to do that?» a manager said. «Every company in America uses some sort of…….. system, but the way it was used at Enron was just too divisive.»

The cultural changes in the company even threatened the very language that defined the company’s……..: respect, integrity, communication and excellence. In the late 1990s, the company’s Visions and Values…….. considered expressing the principles with words such as «smart,» «bold» and «aggressive». The effort……., but it spoke volumes about what was happening at Enron. Smart, bold and aggressive people tend to get impatient with……. The relentless……… to create new ways to make money – or appear to make money – spawned an environment where raising questions about a……. was considered disloyal or, worse, an indication someone «didn’t get it».

Some observers believe Skilling’s style was a product of his……… with McKinsey. «Rank and yank» was a variation on a system developed by McKinsey. The «asset light» mantra that Skilling preached – of a company that owned few hard assets and made all its money off……. and services – was also a McKinsey-…….. concept. But like many……… firms, McKinsey has gained a reputation as a flock of thinkers, not doers.

Skilling’s background was reflected in his……. approach to details. The McKinsey influence can also be seen in his belief that Enron could adapt the…….. it developed in creating energy trading markets to such disparate products as Internet bandwidth, paper products and even weather. The belief was so strong that it wasn’t felt necessary to hire……… with telecommunications…….. to build its broadband business. Instead, it simply gave the job to successful gas traders.

«These were people that didn’t know how to spell `broadband’, never mind…… that business,» said a former senior vice president. «But if you questioned them and the wisdom of the business, you would be ridiculed because you `didn’t get it’. «And when a business did fail or a deal fell apart, more effort was put into hiding the consequences than owning up to the problem. Debt and losses were anathema to Enron’s…………

Source: Tom Fowler, Houston Chronicle, Oct. 20, 2002 (excerpts)

Terms.

consulting, employee-evaluation, rating, hands-off, recruiters, profits, vision, trading, job, financial statements, ranking, human resources, experience, environment, bonuses, values, board, checks and balances, executives, staff, competitiveness, fiscal, decisions, corruption, hiring, managers, monitoring, enforce, units, downgrading, division, fire, Task Force, rules, demand, deal, endorsed, skills, run, failed, background, basics

Exercise 6. Translate into English.

Как это делалось

Финансовое благополучие «Энрона» пошатнулось после нескольких неудачных сделок. В таких обстоятельствах руководство фирмы, как правило, предпринимает экстренные меры: избавляется от второстепенных и убыточных проектов, консолидирует ресурсы и приглашает на работу специалистов по управлению кризисными ситуациями.

Руководство «Энрона» пошло другим путем. Оно придумало и реализовало хитроумные схемы искажения отчетности и сокрытия астрономических долгов. Менеджеры компании учредили ряд фирм, в основном в офшорных зонах, с которыми «Энрон» вступил в партнерские отношения, образовав товарищества с ограниченной ответственностью. Фирмы-товарищи стали скупать неликвидные активы «Энрона». Вместе с активами, которые правильнее назвать пассивами, из баланса «Энрона» исключались его долги. С «Энроном» эти псевдопартнеры расплачивались акциями самого «Энрона», полученными от «Энрона» же в качестве его доли уставного капитала и показанными в отчетах компании как активы. На одних только Каймановых островах энроновцы учредили более 700 подставных (dummy) фирм, а по всему миру – более трех тысяч. Через офшорные счета перетекали в компанию не облагаемые налогами деньги инвесторов. В лексиконе Уолл-стрит такая махинация называется «схема Понци» – по имени мошенника Чарльза Понци, построившего в 20-е годы прошлого века первую американскую финансовую пирамиду.

Однако было бы полбеды, если бы компания всего лишь скрывала таким образом свои трудности. Осознав, что компания идет ко дну, ее руководители стали сбрасывать свои пакеты акций, покуда они не упали в цене. Естественно, акционеры, не осведомленные об истинном положении дел, их примеру не следовали и, напротив, охотно покупали акции «Энрона», которые превратились в бумагу. Эти действия называются использованием инсайдерской информации в целях личного обогащения и караются по американским законам в уголовном порядке.

Одни только пенсионные фонды Америки потеряли на своих инвестициях в «Энрон» полтора миллиарда долларов. Сгорели пенсии государственных служащих, учителей, полицейских и пожарных.

Трюки такого масштаба, само собой разумеется, невозможны без сговора с аудиторами. Они и сговорились. После того как власти призвали к ответу обслуживавшую «Энрон» компанию «Артур Андерсен» – одну из пяти крупнейших аудиторских фирм США, – она уволила главу своего хьюстонского офиса Дэвида Данкена, отвечавшего за аудит корпорации-банкрота. У «Андерсена» затребовали документацию, касающуюся «Энрона». В ответ «Андерсен» сообщил, что, к великому сожалению, значительная часть документов как в бумажном, так и в электронном виде уничтожена по распоряжению Данкена.

Источник: Еженедельный журнал, 1.2.2002

Lesson 15

Corporate Governance

Read and translate the text and learn terms from the Essential Vocabulary

Corporate governance

Corporate governance is the set of processes, policies, laws and institutions affecting the way a corporation is directed or controlled. Corporate governance also includes the relationships among the stakeholders and the goals for which the corporation is governed.

Corporate governance is a multi-faceted subject. An important part of corporate governance deals with accountability, fiduciary duty and mechanisms of auditing and control. Thus, corporate governance players should comply with codes to the overall good of all constituents. Another important focus is economic efficiency, both within the corporation (such as the best practice guidelines) and externally.

Recently there has been considerable interest in the corporate governance practices of corporations, particularly since the high-profile collapse of Enron. Also, during the Asian financial crisis, a lot of the attention fell into the corporate governance systems of the developing world.

The corporate governance structure spells out the rules and procedures for making decisions on corporate affairs. It also provides the mechanisms through which the company objectives are set, as well as the means of attaining and monitoring the achievement of those objectives.

As a result of the separation of stakeholder influence from control in modern organizations, a system of corporate governance controls is implemented on behalf of stakeholders to reduce agency costs and information asymmetry. Corporate governance is used to monitor whether outcomes are in accordance with plans; and to motivate the organization to be more fully informed in order to maintain or alter organizational activity. Primarily, corporate governance is the mechanism by which individuals are motivated to align their actual behaviors with the overall corporate good.

Parties to corporate governance

Parties involved in corporate governance include the governing or regulatory body (e.g. the U.S. Securities and Exchange Commission), the CEO, the BoD, management, shareholders and other stakeholders.

All parties to corporate governance have an interest in the effective performance of the organization. Directors, workers and management receive salaries, benefits and reputation; whilst shareholders receive capital return. Customers receive goods and services; suppliers receive compensation for their goods or services. In return these individuals provide value in the form of natural, human, social and other capital.

A key factor in an individual’s decision to participate in an organization (e.g. through providing capital or expertise or labor) is trust that they will receive a fair share of the organizational returns. If some parties receive more than their fair return (e.g. exorbitant executive remuneration), then participants may choose to not continue participating (e.g. shareholders withdrawing their capital). Corporate governance is the key mechanism through which this trust is maintained across all stakeholders.

Principles

Key elements of good corporate governance principles include honesty, trust and integrity, openness, performance orientation, responsibility and accountability, mutual respect, and commitment to the organization. In particular, senior executives should conduct themselves honestly and ethically, especially concerning actual or apparent conflicts of interest, and disclosure in financial reports.

Commonly accepted principles of corporate governance include:

– Rights of, and equitable treatment of, shareholders.

– Interests of other stakeholders.

– Role and responsibilities of the board.

– Integrity and ethical behavior.

– Disclosure and transparency.

Mechanisms and controls

Corporate governance mechanisms and controls are designed to reduce the inefficiencies that arise from moral hazard and adverse selection. For example, to monitor managers’ behavior, an independent auditor attests the accuracy of information provided by management to investors.