Todays whistleblower reward programs at the SEC and the Commodity Futures Trading Commission provide an option to report potential misdeeds confidentially, offering an easier path for those concerned about fraud at their companies, industry observers said. Because Watkins had a masters degree in accounting, she was able to figure out who was behind the corrupt practices at Enron and who was covering them up. They view me as the person that blew everything up when Im not the one that cooked the books or allowed the books to be cooked, she said. They did pretend they were doing a thorough investigation with me.. Watkins remained employed by Enron until November 2002, almost a year after the company sought bankruptcy protection and after she had begun giving speeches. Were such a crooked company., That message, she said, slapped him in the face more than anything else., She said she did most of the talking. Before Sherron Watkins found herself on the cover of Time, she was just an average citizen like anyone else. Our Morning Risk Report features insights and news on governance, risk and compliance. 1612 K St. NW, Suite #1100 For that and for the courage of her convictions, Time honored her as Person of the Year for 2002. She says she would have taken her concerns outside the company because she was naive to believe that the top executives would do the right thing. Feels like yesterday, but two decades is a long time., In 2002, Watkins was named one of Time Magazines Persons of the Year and she co-authored the book, Power Failure: The Inside Story of the Collapse of Enron.. People found out and demonstrated their support by emailing her, leaving voice mails, and even people around the world would contact her. However, Lay would not allow it. This cookie is set by GDPR Cookie Consent plugin. She joined New York-based MG Trade Finance in 1990 to manage their portfolio of commodity-backed finance assets until October 1993. Sherron Watkins is the Enron vice president who wrote a letter to chairman Kenneth Lay in the summer of 2001 warning him that the company's methods of accounting were improper. What happened to Sherron Watkins after Enron? These cookies will be stored in your browser only with your consent. True. Telling the truth regardless of the circumstances or consequences . Example video title will go here for this video. After recognizing accounting irregularities within the company, Watkins alerted then-CEO Ken Lay in a 2001 memo, warning that Enron might implode in a wave of accounting scandals. Watkins internal disclosure eventually led to a Securities and Exchange Commission investigation, and Enron later collapsed, itsstockplummeting from a peak of $90.75 in mid-2000 to $0.26 by early December, 2001. She sounded the alarm, advising the captain that the ship is sinking. She grew up in the small town of Tomball, Texas. By December 2, plummeting stock prices, anxious investors and some publicity resulted in bankruptcy. To make matters worse, the company promptly cancelled their medical insurance. In less than a year, thousands of people lost their income, their health insurance, and their retirement funds. Watkins used the Titanic analogy, where she was a crew member warning the captain of the ship (Lay), that they have hit an iceberg and water is pouring in. Classroom Curriculum Webinar! We are continuing to have strong growth in our businesses. He even tried to recruit new investors, saying, My personal belief is that Enron stock is an incredible bargain at current prices. He made this statement about the same stock that he was selling as fast as he couldand making millions of dollars in the process. He is serving a five-year prison sentence, and prosecutors said Wednesday he is expected to testify against Lay and Skilling next week. Prior success can make people ignore warning signs in times of trouble. Analysts on Wall Street bought the hype hook, line, and sinker. She says she was like a crew member on the Titanic, alerting management that they had hit an iceberg and that they were going to sink. We use cookies to ensure that we give you the best experience on our website. HOUSTON, Texas Enrons energy empire crumbled exactly 20 years ago in gleaming downtown towers that now house Chevron. Put it in writing, but dont get married to fixing it, says Watkins. July 7, 2021 9:00 am ET. Copyright 2023 Click2Houston.com is managed by Graham Digital and published by Graham Media Group, a division of Graham Holdings. As a vice president at Enron, Watkins was not directly involved in the wrongdoing, but she was able to uncover the truth. She has since co-written a book and traveled around the world to speak about Enron. She noted in her letter that these steps would have severe consequences for the company, but complete honesty was the only plausible way to save the business. Under cross-examination by Lay attorney Bruce Collins, Kaminski, 58, acknowledged that while he had a business degree, he was not an accountant and not an accounting expert. The Raptors had been capitalized with funds from Fastow-run LJM partnerships, which had already recouped their investments plus profits. However, you may visit "Cookie Settings" to provide a controlled consent. A Wall Street analyst later said that Enron was flunking the smell test the numbers just did not add up. In a speech in September 2001, Lay said, Our third quarter is looking great. In a company that listed core values of respect, integrity, communication and excellence, success blinded executives and led them into committing fraud. The reality is frauds start small, so to stop them at their very inception is wonderful, Watkins said. I dont drink coffee to wake up, I wake up to drink coffee.. She discovered that Enron was part of "the worst accounting fraud" she has ever seen. In the end, Watkins was not the only person who knew about the fraud at Enron, but she was the only person to come forward and report it. The company was spending millions and millions of dollars, but Broadband was generating very little revenue in return. According to her mother, [Sherron] knew she had to say something. HOUSTON . To her it was okay to challenge authority if it meant uncovering the truth. A CEO should talk about the companys culture and employees not just about shareholder value or making the company attractive to investors. The fast-paced lifestyle was a lot of fun for a young, single woman, but when she entered her mid-thirties, she decided it was time to return to Texas and settle down. Taking the advice of her mother, Sherron majored in accounting at the University of Texas, where she earned a bachelors degree in 1981 and a masters degree the next year. Sherron Watkins was Vice President of Corporate Development at Enron, a Houston-based energy company that grew to employ 20,000 staff and claimed revenues of over $100 billion in 2000 before its collapse in 2001. There was, however, one problem. In 1996 Business Week included Lay in its list of Top 25 Managers of the Year. About Sherron She first went to senior management, but they were in on the fraud, so they did nothing. She believed that if he knew what she had uncovered, he would remedy the situation and save the company. I can tell you, without pulling punches, something stinks here, he said during a Congressional hearing called to investigate the Enron debacle. I would still be hired to talk about the leadership failures of Enron, she replied. Watkins doesnt regret blowing the whistle, but there are other whistleblowers that do. Skilling told me that he decided to transfer my group, he recalled. She also read that the business world in retrospect would consider Enrons considerable successes as nothing more than an accounting hoax., She said Lay winced when her memo quoted an unnamed colleague who told her I wish we would get caught. Watkins said her concerns were initially dismissed. She wrote a second, longer letter that chronicled all the irregularities occurring at Enron. Why is the Definition of done so important to an agile team? Watkins also discovered the Jason deals that kept hundreds of million of dollars off the books. Copyright 2023 Quick-Advices | All rights reserved. She grew up in the small town of Tomball, Texas. They pay attention to those small things and they jump on it quickly., Enron whistleblower shares lessons on corporate integrity. Id add one more uniqueness about Ms. Watkins that was lacking in all the other individuals who have chosen to come before this committee to stop the bleeding at Enrona moral compass, he said. 4 What is Sherron Watkins biggest regret? I probably said too much for his comfort, Kaminski said. Watkins said her concerns were initially dismissed. We got pushed to the point of crossing lines.. So, what happened? She understood the value of hard work, was loyal to her family and friends, and understood that it was important to respect authority figures. Watkins still visits Houston on occasion but now works as, among other things, a Texas State University professor. Energy companies face ever-changing regulatory requirements, putting technology and IT leaders such as New Jersey Resources CIO Jacqueline Shea at the forefront of compliance. People found out and demonstrated their support by emailing her, leaving voice mails, and even people around the world would contact her. My biggest disappointment is that I was really not believed, Watkins said. Analytical cookies are used to understand how visitors interact with the website. I would have remained anonymous, stayed employed, Enron would still be alive, she said. She said she also interviewed to be an adjunct professor for executive sessions at Rice Universitys business school, a job she didnt get in the end. The story mentions how the whistleblower Sherron Watkins helped expose accounting fraud at Enron, which led to passage in 2002 of the Sarbanes-Oxley Actthe subject of a panel discussion during this month's Leadership and Ethics Week at the Business School. She wrote letters and met personally with Lay, which triggered an investigation into the corruption. "Problems usually happen in successful times," says Sherron Watkins, who is widely known as the "Enron whistleblower.". In Watkins situation, the crimes she uncovered were being committed by people who wielded a lot of power and could fire her if they chose to. The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".