Enron whistleblower speaks PDF Print E-mail
Written by KAREN NADLER COTA Sentinel Lifestyles Editor   
Friday, 04 April 2014 10:47
Sherron Watkins, former Vice President of Corporate Development at Enron and whistleblower of accounting irregularities, gives a keynote presentation during a Women in Leadership event hosted by the BGSU College of Business. (Photo: Enoch Wu/Sentinel-Tribune)
Sherron Watkins landed on the cover of Time magazine, got up close and personal with a bunch of U.S. Congressmen, and was lauded by Barbara Walters as one of the 10 Most Fascinating People of 2002.
On the other hand she lost not just a dream job, and most of her retirement savings along with it, but ultimately an entire career.
The "whistleblower of Enron" gave the keynote address for the Bowling Green State University College of Business' Women in Leadership conference Thursday. This year's theme: "Women and Ethics in the Workplace."
The collapse of Houston-based energy and commodities giant Enron was a corporate swindle of a magnitude almost defying belief.
Prior to joining Enron, Watkins, who had a B.S. in Accounting, worked in New York City, part of the time for accounting giant Arthur Andersen.
Initially, she was ecstatic about her move to Enron.
"I wanted to move back to Texas, where I was from. I had former Andersen co-workers there. It was 'the' place to be," the nation's seventh largest corporation.
Even better, Enron was experiencing stratospheric stock growth each year, "and they were putting half of our 401-K in Enron stock. So every time you opened it, it looked phenomenal."
In retrospect, she says, Enron had "a very unhealthy focus on our stock price. It's what (COO, and later CEO) Jeff Skilling always talked about.
She points to Steve Jobs for contrast. "You really want a CEO who's excited about the product and the services. You never heard Jobs talk about the stock price."
Many upper level employees got used to receiving annual bonus checks greater than their annual base pay.
"That's heady stuff, and it was happening to 15 to 20 percent of the people at Enron. It bought some pretty good blinders," said Watkins.
What the company's 20,000 or so employees didn't know was that Enron was careening toward a cliff - even as "top leadership had sold $1 billion in (company) stock in the last two years before Enron went bankrupt."
Although a couple dozen Enron executives were eventually handed criminal convictions, there are just two who Watkins calls "criminals": Skilling and chief financial officer Andy Fastow. Just months after being named CEO, in 2001, Skilling abruptly resigned from the company and cashed out nearly $60 million in stock.
Two weeks before Skilling quit "I found the fraud," Watkins said. She had stumbled across accounting irregularities.
Her plan was to put together evidence of the fraud, report it privately to company founder Ken Lay, and immediately leave the company.
Skilling's sudden departure messed that up.
"I was too rushed.  The day after Jeff Skilling resigned I had a dozen people helping me" collect data to prove the irregularities and Watkins says she should have brought some of those people along with her to meet with Lay, plus someone above her in the corporate ladder.
"My biggest mistake: I went in by myself where he could dismiss me as a single voice."
"I thought (Lay) was a different person" than he turned out to be. "I thought he would listen to me. I just wanted him to hire an outside law firm to look at this."
Instead of taking steps to "make it right," Watkins found out later that Lay's immediate response to her Aug. 15, 2001 memo to him was to get confidential advice about whether he could safely fire her.
"I'm sure they looked through eight years of my expense reports to see if they could fire me for cause," she added, warning to her audience to always be scrupulously honest about such paperwork.
The company filed for Chapter 11 that December, laying off 4,000 people "with no warning, no severance, and three weeks before Christmas," Watkins recalls. Many more were laid off in January.
Enron shares worth $90.75 at their peak in August 2000, had dropped to $0.67 in January 2002.
Why did Watkins and others go along with the status quo for so long?
"You would end up getting a push-back that was very intimidating," Watkins said of her earlier attempts to bring matters to Skilling's attention.
Whenever Watkins found herself "trying to understand" something Enron was doing that didn't gel with established accounting practices, Skilling or Fastow's response was that if you couldn't see the brilliance of doing it Enron's way "you're either stupid or not doing your job right."
"You can't speak truth to power from even the second rung if the first rung is corrupt," Watkins warns business students.
What she didn't realize at the time was that "there's really nobody with the label of whistleblower that works in their normal career again." That was something another whistleblower told Watkins after the Enron trials. She was shocked, but now admits it's probably true.
Potential employers may think to themselves: "Can't we find someone with the same skill set who comes with less baggage?"
"The Fraud Triangle," she said, has three components: Financial pressure, the opportunity to cheat, and "the rationalization that what you're doing isn't actually illegal."
"I've got so many baby gifts, wedding gifts from felons in my house," she said to loud laughter from the BGSU audience.
Based on her experiences as a woman in corporate America, Watkins recommended that her female business audience:
• Consider finding themselves a male mentor. Much as we would like to think otherwise, the top levels of business are still controlled largely by men, and at times women would do well to emulate their more direct communication style, she argued.
• Find a way to be your own cheerleader.
• If faced with an ethical dilemma in the workplace, "listen to the still, small voice inside you that is warning you. If it's something you wouldn't want to read on the front page of the newspaper, don't do it. If it's something you wouldn't want your mother to hear about, don't do it."

Last Updated on Friday, 04 April 2014 12:59

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