Though business ethics are guided by the law, some companies choose to bend the law in their favour. By definition, business ethics are referred to as the study of accepted business practices and decision-making. It usually involves controversial issues such as bribery, discrimination, or social responsibility. Businesses must aim to operate within the framework of ethics to gain trust from the public eye as a legitimate corporation. Perhaps the most scandalous act of business ethics in recent years was the Enron situation. Enron was once known as America’s seventh largest company. Through its immense success of trading energy, the entrepreneurs of Enron believed it can trade anything from newsprint to insurance risk. Many of these projects failed, but the company covered the debt through several partnerships, specifically with banks. Enron claimed to use bank loans as imaginary revenue. This puzzled the banks and accountants at Arthur Andersen. Enron violated its social responsibility of honesty to the public about its numbers and stole the trust of many alliances. Instead of admitting failure, they chose to handle the situation in an unethical manner by concealing the losses. Ultimately, unethical business behavior leads to collapse.

More about Enron can be found here: http://www.economist.com/node/940091.