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.. She was successful at Enron and was promoted to vice president. Watkins was vindicated when a congressional staffer found her memos to executives about the fraud she had uncovered. I certainly do not make the kind of living I could have had I stayed in corporate America the last 20 years, she said. Watkins testified today to a congressional subcommittee investigating Enron. Known at Enron for her use of colorful language, she was poised and sometimes animated as she deflected defense attempts to rattle her. She understood the value of hard work, was loyal to her family and friends, and understood that it was important to respect authority figures. Their years of elaborate lies and deception led to one of the largest corporate scandals the world has ever seen. She was active in Salem Lutheran Church and attended a Lutheran school before transferring to Tomball High School. April 2003 0. HONESTY. As a vice president at Enron, Watkins was not directly involved in the wrongdoing, but she was able to uncover the truth. The company was spending millions and millions of dollars, but Broadband was generating very little revenue in return. Sherron Watkins, the former Enron accountant who warned higher-ups the company was a house of cards ready to fall. When Lay turned the conversation to Fastow and reports that questioned his integrity, Lay said the companys board was fully united behind Fastow. Sherron Watkins -Honesty Downfall at Enron Enron declared bankruptcy, and many people lost their job. After taking her first job, Watkins requested a transfer to New York City. TheEnron Scandalis thought to have resulted in a wave of new corporate and financial reforms including the SOX of 2002, which Government Accountability Project itself helped to draft and enact. Its not relevant to me at all if they are convicted in this court.. Where was the Dayton peace agreement signed? I met with [Enron founder] Ken Lay and I gave him all this information, she says. You have to pay attention to disaster, plan for it and be disciplined to follow that plan, Watkins says. Sherron Watkinsis the former vice president of Enron Corporation who alerted then-CEO Ken Lay in August 2001 to accounting irregularities within the company, warning him that Enron "might implode in a wave of accounting scandals." She has testified before Congressional committees from the House and Senate investigating Enron's demise. These cookies track visitors across websites and collect information to provide customized ads. I can tell you, without pulling punches, something stinks here, he said during a Congressional hearing called to investigate the Enron debacle. She became a whistleblower. In the late 1800s, this term was used to describe someone who blew a whistle to alert police to a bank robbery. Our Morning Risk Report features insights and news on governance, risk and compliance. Watkins knew that her conscience would not let her ignore the situation. About Sherron She first went to senior management, but they were in on the fraud, so they did nothing. The largest of all of these Jasons involved a dummy corporation that was created to buy off some of Enrons debt. That was the case at Enron Corporation, where Watkins served as a vice president. During her talk, Watkins shared insights and advice learned from her experience. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. Watkins was called to testify before committees of the U.S. House of Representatives and Senate at the beginning of 2002, primarily about her warnings to Enrons then-CEO Kenneth Lay about accounting irregularities in the financial statements. Following her report of Enrons use of complicated off-balance-sheet vehicles to mask hundreds of millions of dollars in losses, Ms. Watkins was lauded and even chosen as one of Times Persons of the Year in 2002, alongside two other whistleblowers. She did her homework to ensure her facts were accurate. You were courageous.. Husband and father of the Master of Disaster and Chaos Gremlin. Still, she wanted to come forward because she was convinced that it was the right thing to do. There was immense pressure on employees to close profitable deals at any cost. Enron filed for Chapter 11 bankruptcy protection. She acknowledged to Lewis that she didnt know how the Raptors were created or what approvals they had received. To her surprise, he continued to hide the truth. In the process, she also exposed herself as a whistleblower. Watkins says her only regret is going at it alone. On this Wikipedia the language links are at the top of the page across from the article title. [2] Watkins was represented by Houston attorney Philip H. Hilder. I cant believe it, she said. On Thursday, February 19, famed Enron whistleblower Sherron S. Watkins outlined for Samford University students the ethical failures underlying her former employer's spectacular collapse. An Inside Look at Ukrainian Troops Training to Use Western Tanks, How Chipotle's Stock Price More Than Quadrupled in Five Years, How Repaying Student Loans Is ChangingDramatically. Even worse, the accounting firm charged with overseeing Enrons finances also gave its okay. Former Enron Corp. Vice President Sherron S. Watkins, who gained national renown as a whistle-blower, described on the witness stand Wednesday how she had tried to warn her bosses of . If you would be embarrassed to discuss a transaction with a mentor you respect and admire, its problematic, says Watkins. Enrons collapse, 20 years later: KPRC 2 journalists reflect on covering the scandal. After she uncovered the truth the company of Enron got better. People found out and demonstrated their support by emailing her, leaving voice mails, and even people around the world would contact her. Prior success can make people ignore warning signs in times of trouble. What was Sherrons biggest regret? Charles Prestwood is a hard-working blue-collar employee who spent 33 years of his adult life working in the gas industry. Sherrons uncle owned the local supermarket, and her cousin managed the funeral home. This cookie is set by GDPR Cookie Consent plugin. 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. Watkins, then a mere VP at Enron, was one of the few people to warn CEO Kenneth Lay of the company's impending doom after his predecessor, Jeffrey Skilling, resigned. She even proposed specific steps for Enron to follow if the company hoped to get out of this mess. Sherrons parents divorced when she was an adolescent, and she lived with her mother and sister in a modest two-bedroom house. Why would a reputable accounting firm go along with this unethical proposal? Watkins was called to testify before committees of the U.S. House of Representatives and Senate at the beginning of 2002, primarily about her warnings to Enron's then-CEO Kenneth Lay about accounting irregularities in the financial statements.[1]. Executives also began inflating the cost of the companys assets. Watkins still considers herself lucky. 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. She said she has some speeches lined up for next month, and in such talks has called Fastow an assassin under orders from Skilling. Copyright 2023 Click2Houston.com is managed by Graham Digital and published by Graham Media Group, a division of Graham Holdings. I hope that sons and daughters of American citizens follow your example, frankly, and adopt your concept of corporate loyalty as a mantra.. When Sherron was in eighth grade, she had a significant experience that would prepare her for her role at Enron many years later. Published on February 19, 2004 by Sean Flynt. After doing some investigating on her own, Watkins discovered that Enron was part of the worst accounting fraud Ive ever seen. Numbers were being manipulated, losses were being disguised, and people were covering it up. Really deep down in your core, you wouldnt be happy with yourself. Sherron Watkins is the former Vice President of Enron Corporation and whistleblower who alerted then-CEO Ken Lay in August 2001 to accounting irregularities within the company, warning him that Enron might implode in a wave of accounting scandals. Texas law provided no protection for whistleblowers, meaning that Watkins could be fired very easily. Watkins was an accountant for Enrons former outside auditor, Arthur Andersen LLP, before she joined the energy company in 1993. It took the actions of one courageous employee, Sherron Watkins, to expose this widespread fraud to the rest of the business world. Watkins, who has never been charged with insider trading, said Wednesday her knowledge prompted her to sell almost $50,000 in stock after her August 2001 meeting with Lay and before Enron shares became worthless months later. Necessary cookies are absolutely essential for the website to function properly. She said she learned later that he ignored her advice to hire outside accounting and law firms other than those Enron already used Andersen and Vinson & Elkins to investigate her concerns. Watkins was selected as one of three "Persons of the Year 2002" by Time magazine, alongside two other whistleblowers, Cynthia Cooper of WorldCom and Coleen Rowley of the FBI. As a seasoned professional, Watkins realized she had made a big mistake by joining the department. . 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. My biggest disappointment is that I was really not believed, Watkins said. People found out and demonstrated their support by emailing her, leaving voice mails, and even people around the world would contact her. Lay died of heart disease two months later while awaiting a prison sentence that could have lasted 45 years. These cookies ensure basic functionalities and security features of the website, anonymously. Cynthia Cooper In Houston, Enron whistleblower Sherron Watkins has taken the stand to testify against the company's former chairman, Kenneth Lay. He said his then-boss, trading division head Greg Whalley, gently pushed him from the podium. The latest Houston news, weather and sports from KPRC 2. This cookie is set by GDPR Cookie Consent plugin. The motto of one of the executives was Never say no to a deal. As long as employees produced results, they were not questioned about their methods. In 2019, Ms. Watkins wrote a comment letter protesting two amendments the SEC proposed to its whistleblower program rules, which she said could discourage individuals from reporting tips and affect how they are rewarded, and met with several of the commissioners at the time. People found out and demonstrated their support by emailing her, leaving voice mails, and even people around the world would contact her. Who was the whistleblower that eventually brought down the Enron Corporation? Speak your truth to those in power. Everything in her life was going well, until she began to uncover the unethical accounting practices at Enron. Can 5G phones cost less than $100? Sherron Watkins was an Enron VP when she warned boss Ken Lay of an impending implosion.. Watkins also quickly said, Not anymore, when Lewis questioned whether she believed Vinson & Elkins was among the nations pre-eminent law firms. Watkins also received national awards for her honesty and courage. Copyright 2021 by KPRC Click2Houston - All rights reserved. Its up to them to do the right thing.. Kaminski refused to bless the unwinding procedure. Fortune named it the Most Innovative Company in America six years in a row from 1996 to 2001. Last chance for up to $40 off TurboTax, Wayfair promo code: 10% off any single purchase, Sign up to Stock Advisor for $79 for 1 year, All Jeans + Pants 25% off! Watkins said she remembers the meeting she had with Enron founder Ken Lay. If you wouldnt want it on the front page of the media, its problematic. But opting out of some of these cookies may affect your browsing experience. In 1996 Business Week included Lay in its list of Top 25 Managers of the Year. How did Sherron Watkins show honesty? Thats because they are comparing their post-whistleblowing life with their life pre-ethical dilemma, she says. With leadership experience in legal, privacy, diversity, and governance functions, the companys chief legal officer focuses on staying true to her personal purpose and role as strategist. To help other companies avoid Enrons mistakes, Watkins has started her own consulting firm to advise businesses on ethics in the workplace. Andersen had won lucrative, non-audit consulting work from Enron, and would not want to jeopardise the. And I said I believe what Andy Fastow did was not only improper but terminally stupid, and what Enron should do at this point is come clean.. Both Skilling and Carter who tied the knot Saturday have been divorced and have children from previous marriages. The company projected that Broadband would produce revenues of $54 billion in 2000 and $280 billion in 2001. In June 2000, Watkins went to work for Enron Broadband Services. A Martin Luther King Jr. quote used to be found at the Enron offices: Our lives begin to end the day we remain silent about things that really matter. The problem with innovation is the dark side of pushing your employees that much, says Watkins, who spoke at UNC Kenan-Flagler as part of the Deans Speaker Series. Call Us: (231) 938-4140 Contact Us. As a result, the company stock fell from a high of $90 a share in December 2000 to less than 70 cents a share just 11 months later. He said he told former Chief Risk Officer Rick Buy: Im not going to sign off, even if Im going to be fired.. When this company declared bankruptcy miraculously nobody lost their job. Senior executives were selling their own stock in the company as fast as they could. Classroom Curriculum Webinar! However, Lay would not allow it. So thats got a benefit that money cant buy., Write to Mengqi Sun at mengqi.sun@wsj.com, Copyright 2022 Dow Jones & Company, Inc. All Rights Reserved. "Its amazing how much Enron is still the byword for mega corporate scandal, said Watkins. She said she felt shunned after her name became attached to the Enron collapse. Prosecuting Enron: Inside the trove of evidence that helped take down the energy giants former executives, No one believed me in the Fall of 2001, she said. Almost 5,000 employees were fired without warning. Jordan Thomas, ", TEA could take over Houston ISD next week, Mayor Sylvester Turner says, What happened to the Luby's sign on Westheimer? As a result, Enron declared bankruptcy, thousands of people lost their jobs, and employee retirement accounts were decimated. Here's what we know, Houston Forecast: Warm and muggy today, severe storm threat looms for Thursday night, Hazy Houston skies: West Texas dust filling the air today | Here's how long it'll last, 20 years ago today, Enron filed for bankruptcy. The cookies is used to store the user consent for the cookies in the category "Necessary". Initially Kenneth Lay, Enrons chief executive officer, had a superb business plan. Kenneth Lay, There was also a cost. 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, Campbells Soup Sales Were Declining. But then again, my daughter probably felt like I was a stay-at-home mom able to go to all of her school events, sporting events and was always there. Ben Glisan Jr., former Enron treasurer and chief architect of the Raptors, pleaded guilty in September 2003 to conspiracy for developing the entities to help manipulate Enrons books. They took huge professional and personal risks to blow the whistle on what went wrong at WorldCom, Enron and the FBIand in so doing helped remind us what American courage and American values are all about.. Nearly all of his investments were tied up in just one company and that was his former employer, Enron. She learned in February 2002 that the company sought legal advice on the consequences of firing her two days after her meeting with Lay. Problems usually happen in successful times, says Sherron Watkins, who is widely known as the Enron whistleblower.. 2 Who was the whistleblower that eventually brought down the Enron Corporation? The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional". https://www.wsj.com/articles/former-enron-executive-sec-whistleblower-program-is-a-game-changer-11625662801. For the last 15 years of his career, he was a plant operations worker for a company called Enron. 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. Watkins began her career in 1982 at Arthur Andersen as an auditor. For example, if the company met its projected earnings in a given year, executives would transfer some of the earnings to the next year to cover any unexpected losses. Accounting just doesnt get that creative, she testified. She attributes this to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which established bounty programs such as the one at the SEC, enabling individuals to report possible violations of federal securities laws anonymously with the help of lawyers. Two years later his team, which had been moved from risk assessment to Enrons trading division, was asked to assess the value of financial structures known as Raptors. Analytical cookies are used to understand how visitors interact with the website. So, what happened? I was just dumbfounded, you know? Character Education Curriculum for High Schools, Character Education Curriculum for Middle Schools, Character Education Curriculum for Alternative Education, Social-Emotional Learning (SEL) Curriculum, Traditional Classroom Curriculum Training, Andrew Whitworth: The Importance of a Positive Role Model, The Importance of Acknowledging Mental Health. I gave him all this information, she says her surprise, was! 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