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The Ethics Experts - Episode 100 - Sherron Watkins — Transcript

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0:00[Music]
0:01welcome to the ethics expert where we're
0:03elevating ethics and compliance and hr
0:06to the strategic level it's supposed to
0:08be
0:09hello everybody welcome to the ethics
0:10experts if it's your first time joining
0:12us welcome and if you are a returning
0:13subscriber hello bestie i hope you're
0:15having an amazing day you see what
0:17happens when you subscribe to the ethics
0:18expert you get a bonus greeting on every
0:19single episode so absolute no-brainer to
0:21crush that subscribe button we are here
0:23today with a very special guest for our
0:26very special
0:27100th episode
0:29the one and only sharon watkins how are
0:30you sharon
0:32oh good thank you all for having me i'm
0:33quite honored to be on your 100th
0:35episode well thank you yeah everyone
0:37talks about this podcast because this is
0:38the highest rated uh ethics and
0:40compliance podcast in the world global
0:42globally and uh we're super excited to
0:44get you on so you first came on my radar
0:46when i was in undergrad majoring in
0:48accounting and finance when the whole
0:50enron scandal uh collapsed or when you
0:53you know when you speaking up and you
0:55showing that courage brought down one of
0:56the really really you know a golden
0:59child
1:00of uh of the economy so super excited to
1:02get you on our paths are converging uh
1:06here we
1:07we help a lot of ethics and compliance
1:09professionals we talk to a lot of
1:10whistleblowers and so you know who
1:13better for the hundredth episode than
1:14the one and only sharon watkins
1:18thank you
1:19so glad you're here sharon an honor to
1:21have you
1:22so let's just kind of dive in and jump
1:24in for people who've been living under a
1:26rock or people who are in the uh
1:28millennia or the the gen z generation
1:31why don't we start with your story how
1:32you kind of came to
1:34uh how your name came to be in the
1:36headlines and what that path was like
1:39through that that company
1:42well sure
1:43i had
1:44been in enron about eight years
1:47and frauds are quite often discovered
1:50when people switch positions you're kind
1:52of like the the person walking in the
1:54room saying hey what's this elephant
1:56maroon and everyone else has been trying
1:58to put up blinders and not not see that
2:00elephant
2:01and i i switched jobs
2:04stumbled across horrible fraud
2:07and i will say that enron used a lot of
2:10complexity in their accounting
2:12shenanigans
2:13and i quite often use the emperor's new
2:15clothes as an analogy about it you know
2:18where you've got an emperor focused on
2:20clothes and not running his kingdom and
2:22that really was ken lay our chairman and
2:25ceo
2:26he was focused more on politics on
2:29you know the outward image of
2:31of trying to bring
2:33gas-fired power to developing countries
2:37you know it's a little cleaner than coal
2:39or other things just focused on the
2:41outward image swindler's in that
2:44tail i consider to be jeff skilling and
2:46handy fast out jeff skilling was our
2:48chief operating officer and andy pastel
2:51was our chief financial officer
2:53so i considered them the swindlers
2:55but um in that fable
2:58you know you can't see the cloth if
3:00you're either stupid or not fit for your
3:03office you know so sort of some
3:05intimidation around this
3:07and that's kind of the way enron
3:09operated um jeff skilling used to have a
3:11famous saying of
3:13um
3:14hey
3:15um you know that person isn't smart
3:17enough to get it you know if you're
3:19asking too many questions you know the
3:21person we've hired the smartest finance
3:23minds in the country the smartest
3:24accounting minds
3:26legal minds you know you're going to
3:28keep asking questions and show you're
3:30too stupid to get it um so what happened
3:33was i stumbled across this fraud
3:36was dusting off my resume i just was
3:39like i've got to get out of here and
3:40within literally two weeks after finding
3:42this fraud jeff skilling quit the
3:45company
3:46so i felt like wow you know that's
3:49probably you know i probably know a
3:51deeper reason why he's leaving
3:53um
3:55you know let me
3:57let me go speak with ken lay chairman of
3:59the chairman of the board he's stepping
4:01back in a ceo he hasn't been paying
4:03attention to the details
4:05i thought skilling's resignation gave me
4:08credibility like maybe now you know you
4:10can believe
4:11this horrible thing i'm telling you
4:13because why else would someone like jeff
4:15skilling leave their dream job been at
4:17the company for 10 years he finally got
4:19the ceo spot january 2001 and eight
4:23months later he's quitting right
4:25so what was that like what was the
4:27reaction you got like
4:29and uh how surprising was that for you
4:33well it it was a i was really waking up
4:36two o'clock in the morning unable to go
4:38back to sleep rehearsing in my mind
4:40you know
4:41what could i tell ken lay to let him
4:44realize that arthur anderson this very
4:46well-respected auditing firm had really
4:48prostituted themselves you know it's
4:50hard to hard to believe a firm would
4:53would let first off you're really saying
4:55enron's committed accounting fraud but
4:57also arthur anderson has allowed it to
4:59happen
5:01and um you know i thought i had
5:03the right memos the rights spreadsheets
5:07but what was crazy about it i had about
5:0930 minutes with him
5:11and he was listening and
5:13acting like okay he's taking me
5:15seriously
5:16but near the end he said
5:19well you think andy fast out
5:21is doing a good job right the cfo he's
5:23doing a good job
5:25and i was just dumbfounded you know i'm
5:27sitting here telling you that your cfo
5:29has helped cook the books
5:31how can i possibly agree with you that
5:33he's doing a good job wow
5:36what a mind-boggling response
5:38yes yeah i just want to make sure that
5:40you think he's he's so so what you're
5:42saying is he's a good cook
5:44he's great
5:47he's managed to fool a lot of people
5:50yeah i guess i mean i guess he's good at
5:51something so um leading up to that
5:54sharon
5:55like how quickly were you convinced
5:57of what you were sitting on because i
5:59imagine there are
6:00all of these people who had a sniff of
6:03this knew that it's that it was stinky
6:06you know turned
6:07a blind eye just said uh you know i'm
6:09sure someone else is checking that oh we
6:10get an audit so you know arthur anderson
6:13probably would have caught that i may be
6:14misinterpreting it what was your path to
6:16going from like whoa what's going on
6:18here too like i'm almost completely
6:20certain that there's a massive problem
6:22here
6:24well it
6:25there's sort of a twofold answer to that
6:27question first off i started my career
6:30at arthur anderson and worked to being
6:33up to an experienced manager i worked in
6:35both the houston and new york offices
6:37and that eighth year when you're getting
6:39close to knocking on the door to make a
6:41partner
6:42they told all of us experienced managers
6:45that the number one criteria for you to
6:47make partner
6:48is if we took away your book of business
6:51you know all your auditing clients
6:53you could rebuild that book of business
6:54in one year wow wow so they're saying
6:58salesmanship
6:59you know
7:00is more important than technical
7:01proficiency or your commitment to
7:04auditing standards and accounting
7:06principles right so and then so i knew
7:09anderson had lost its way
7:11and then additionally
7:14um
7:15i had seen them sign off on some things
7:17in 96 that i thought were inappropriate
7:20but when i started meeting with people
7:23concerned with
7:24these raptor structures that i had
7:26stumbled across
7:28the answers were you know once again
7:30it's very complex lots of boxes on a
7:33white board
7:34but
7:35the raptors were supposed to be outside
7:38entities
7:39and they owed enron about 500 million
7:41dollars and the people explaining the
7:43structures
7:45said well the raptors are going to pay
7:46enron back by accessing and getting
7:49their hands on some enron stock that's
7:51kind of in these structures selling it
7:54in the marketplace and paying enron back
7:56and oh the stock isn't worth 500 million
7:58anymore it's worth about 200 so there's
8:01a hole here a 300 million dollar hole
8:03and i didn't hear where there was any
8:05outside money involved like who lost
8:08money yeah enron's lost money we haven't
8:10reported it in our financial statements
8:12but the way we're covering that loss is
8:16you know more
8:17more enron stock selling in ron stock in
8:19the marketplace who's the third party
8:21that that lost money
8:23and
8:25people trying to explain it to me
8:26finally would just give up and say hey
8:28we're not accountants arthur anderson's
8:30blessed it must be okay okay right
8:33yeah because that was kind of my
8:35follow-up question of that it seems like
8:37you you know we talk within our company
8:38about this value of common sense right
8:40you don't need to have a phd you don't
8:43need to be a rocket scientist to kind of
8:46figure out like hey you know at some
8:48point this is a closed system so it's
8:50got to go somewhere it seems like you
8:52had that common sense but you know
8:54i think my question is c.s lewis has
8:57this idea of the inner ring of there are
8:59people very close to something that know
9:00exactly what's going on and then there
9:02are all these concentric circles of
9:04someone's kind of in on it or you know
9:06someone kind of has some blinders what
9:08do you think was the range you know
9:10uh you know i'll just maybe lead it here
9:12i imagine not every employee at enron
9:14other than you was completely in on it
9:16and had signed off on it but what do you
9:18think is that mix of the people around
9:19you i think you mentioned some people
9:20just saying hey we're not accountants
9:22but you know how does something this big
9:24happen and where do you think kind of
9:26people around you could have noticed it
9:28or been brave enough to speak up and
9:30they didn't
9:31well and i think those are great points
9:33that inner ring the people that really
9:35knew
9:36that it was wrong i'd say it was not
9:38even a half a dozen people wow
9:41ben glisson
9:42was a an accountant
9:45hired out of the industry accounting
9:46industry to work at enron for andy fast
9:49out and he helped structure some of
9:50these things and he was one of the first
9:52to plead guilty you know he just he like
9:55i know this is bad they're gonna
9:56eventually find out it's bad so i'm just
9:58gonna be first in line and get the best
10:00deal okay
10:01um i i just think not too many people
10:04were really understanding it and it
10:06falls into that
10:08um arena of just this isn't my role i
10:11don't quite understand it but your point
10:13that
10:15none of this is that complex
10:17and if
10:18if if you can't explain it to a first
10:21grader
10:22um or if you're on the other side of the
10:24table and someone's trying to explain it
10:26to you
10:26if they can't explain it
10:28either they don't understand it or it's
10:31intentionally opaque it's intentionally
10:33complex they are trying to just wear you
10:36down to where you just give up and
10:38and do that diffusion of responsibility
10:41excuse well anderson's blessed it must
10:43be okay
10:44um so i think and the reason that latter
10:48problem existed is enron had a rank and
10:50yank review system
10:52you were it was pretty brutal you were
10:54evaluated twice a year what have you
10:56done for enron lately so people that
10:58were not in the accounting department
11:00would just say
11:01hey you know i'm not getting good
11:03answers i don't feel good in my gut
11:05about this but i'm not in the accounting
11:07department it's not my job what have i
11:08done for enron lately i got to go focus
11:10on my next deals right
11:12yeah and um you need a certain
11:14confidence interval or a certain courage
11:16to step out or step into something
11:18that's sort of outside of your realm i
11:19mean at the end of the day i think
11:20people are most concerned about
11:22themselves their personal safety or
11:24whatever which can obviously translate
11:25into keeping them you know keeping their
11:27mortgage paid and keeping their kids fed
11:29and stuff like that so it becomes kind
11:31of easy especially on something that's
11:32intentionally opaque to your point um
11:34for them to say you know what i can't
11:36really spend a lot of more calories on
11:37this it's not even my area again we have
11:40you know one of the big five at that
11:41time you know blessing the thing so you
11:44know kind of move on keep your job and
11:46don't fall at the bottom of that rank
11:47and yank uh hierarchy you know what i
11:49mean
11:50exactly but you know then the problem
11:52becomes you know the department of
11:53justice has
11:55over two dozen felons associated with
11:57enron
11:58and
11:59you know only only a handful are the
12:02perpetrators of the fraud
12:04the rest are sort of unwilling
12:05participants you know those people that
12:07weren't getting good answers but just
12:09said hey it's not my job
12:11additionally there's a whole host
12:13that had to pay hefty legal fees
12:16trying to make sure they weren't
12:18indicted
12:19yeah so there was quite a cost to going
12:21along
12:22yeah and it's a cost that people don't
12:24think they're gonna have to uh bear is
12:26the point i mean there there's a bet
12:28being made at at all times right you're
12:31making a bet on hey you know i'm not
12:34gonna get in a bad spot from you know
12:36not speaking up or
12:38you know whatever
12:40whatever the expected value of this sort
12:42of uh game is
12:43uh so to speak and boy that can really
12:45go left when you're sitting there uh in
12:47the courtroom racking up you know
12:49there's ten thousand dollars per hour
12:51probably more when you look at your
12:53legal team sitting next to you with the
12:54legal pads
12:55uh it's very fragile it can fall apart
12:57very quickly and again like i was i'm
12:59just fascinated by the enron thing
13:00because it was like my first picture of
13:03uh you know this thing that glitters is
13:05not actually gold you know as i'm sort
13:07of learning about business and stuff
13:08like that um and it's uh recently a
13:11couple of things have been popping up on
13:13some like social feeds of like this
13:15forbes picture this forbes cover of like
13:18you know america's best companies and
13:20it's enron and it's got the ceo on it
13:21and it's like boy this did not age that
13:23well but again from the surface you
13:25don't know what's going on inside the
13:26company just like you don't know what's
13:27going on in somebody's house you know
13:29what i'm saying you don't you don't you
13:30don't know what's happening behind those
13:31four walls and you can't tell from
13:33looking at that glossy cover the type of
13:35incentives that leadership is sort of
13:38imposing on the organization either
13:40explicitly or implicitly by some of
13:42these tactics that that we're talking
13:43about i find it super interesting though
13:46that you go to the chairman and it again
13:48i don't know like these guys very
13:50detailed but
13:52it doesn't sound like the chairman had a
13:53different that different of a view than
13:55the ceo you know what i'm saying like
13:57the same tactics were kind of employed
13:59against you maybe a different flavor of
14:01them to kind of stiff-arm you to kind of
14:02shut you up and so forth so it's like
14:05that tone from the top has such a
14:07massive impact on the lives and how
14:10people live out those lives throughout
14:11the organization
14:12oh you're exactly right i mean i
14:15back to the emperor's new clothes
14:17i had jeff mcmahon a former treasure
14:20encouraging me to meet with lay you know
14:22i had met with him and he told me some
14:24additional information he said i'll put
14:26a call in i'll tell him your your you've
14:29got credible concerns and he should
14:31listen to you
14:32um you know i was i was encouraged to go
14:35meet with with ken lane
14:37and all this is between you know jeff
14:39skilling leaving a week later when i'm
14:41on ken lay's calendar yeah and it's
14:43almost like i am meeting with ken lay
14:45saying you're the emperor you know
14:47you're being swindled you've got on no
14:48clubs and ken lay could have turned to
14:51the executives right underneath them and
14:53said you know could she be right are we
14:56exposed if we cook the books but i think
14:58instead he turned to the executives
15:00around him and said hey
15:02you know we're paying anderson 52
15:05million dollars a year to audit us one
15:07million dollars a week i better be
15:09clothed you know for that amount of
15:11money yeah and they were like hey you
15:14know you're you're i'm sure you are
15:15anderson's the clothing expert not me
15:18um so he sent out the vibe
15:21that
15:22what sharon watkins is telling me better
15:24not be true right
15:26so i think people were ready and willing
15:29to kind of back me up but then they read
15:32the tea leaves and back down
15:34yeah and i think it you know gets to
15:36core values that are so important to
15:38this right like there are all these
15:39layers of how you impact
15:42a situation like this right it can be
15:44policies it can be audits it can be
15:45enforcement it can be culture but you
15:48know i think within that answer is an
15:50expression of
15:52this value of she better not be right
15:54just like you were talking about that at
15:56anderson it was like you better get
15:57billings and you better be able to bring
15:58in revenue because that is the value
16:01that's going to win the day
16:02um and you know i think that you saw
16:05that expressed in that answer right
16:07where he's like
16:08not you know the the value is not
16:10integrity or truth or hey let's make
16:12sure that like we come clean if we mess
16:14something up the value is hey someone
16:16better uh protect me which we kind of
16:18talk about as like compliance 1.0 of
16:21compliance and ethics you know like we
16:23talked about it being in the 90s the com
16:2590s compliance and ethics was keep the
16:27boss out of jail and it's progressed a
16:29lot past that but that's like that's
16:31like the epitome of this thing of like
16:33hey i better be protected here
16:35i know i know and you know on the whole
16:37ethics front it seems like there's great
16:39tools to do employee surveys you know to
16:42figure out really what's going on
16:44underneath the surface but too many
16:46companies
16:47don't even want to know right you know
16:49they don't employ these rather
16:50simplistic
16:52not not very expensive tools keep the
16:54lie alive is maybe what some companies
16:57should put on their value statement you
16:59know they want to keep the lie alive you
17:00know they don't want to they don't want
17:02to know
17:03and um
17:05it really makes it hard for
17:07whistleblowers and we've had some other
17:08whistleblowers on the podcast and we've
17:11had some chats with those folks
17:13and many of them have said
17:16you know i didn't know what i was
17:17getting into but if i had the
17:19opportunity to do it again i probably
17:20would still do the same thing how do you
17:22feel about
17:23that decision
17:24that you made
17:26well it's it's very ironic that enron's
17:28core values were respect
17:31integrity communication and excellence
17:34and on that communication
17:36value
17:37the little note pads and desk toys that
17:40we would have
17:41um was a martin luther king jr quote
17:43that our lives begin to end the day we
17:45remain silent about things that really
17:47matter wow
17:49and so unpacking that quote
17:52you know what do you mean your lives
17:53begin to end
17:54um and what he really means is you know
17:57your soul is eroding yeah right your
17:59ability to think highly of yourself
18:01you know and what you stand for and what
18:03your purpose is you know sort of erodes
18:06and i've seen that with some of my enron
18:08colleagues
18:10um the ones that
18:13you know we're not the one some of the
18:15ones that mentally are healthier or the
18:17ones that pled guilty and went to prison
18:19for a couple years because they've kind
18:20of come to terms with their role in
18:23enron's fraud but the ones that weren't
18:25indicted kind of fought it
18:27they're now coming out on
18:29the excuse that the government was
18:31abusive or you know
18:33made a mountain out of a mohill they're
18:35having to rationalize how they weren't
18:37involved in something bad
18:39and that rationalization i think erodes
18:41your soul
18:43you know causes causes stress and
18:45everything else
18:47um it's
18:49it's um
18:51[Music]
18:53i think it's it's more for me i would do
18:56things a little more differently
18:58but
18:59i think when an ethical challenge lands
19:02on your lap
19:03you can't compare your life to what it
19:06was before the ethical challenge
19:08you know it will never be that way again
19:09a challenge is landed on your lap and
19:12it's best to
19:13be fearless to address it to speak up
19:15and try to get it corrected
19:17because that's the path where you're
19:20um you're going to be most proud of
19:21yourself versus trying to cover up or
19:24ignore it wow i really love the way that
19:27you talk about that sharon because you
19:28know i think a lot of times
19:30when people talk about this or when
19:32people consider it the the
19:35distinction is
19:36well what is going to cost me if i speak
19:38up
19:39and how does that compare to what my
19:40life is going to be if i don't and it's
19:42thought of like well hey i had to deal
19:44with all of this you know people
19:45slinging mud at me and i was you know
19:47kind of black bald from the industry or
19:49whatever it is look at the cost of
19:50speaking up but i love that you've
19:51highlighted the cost of not saying
19:53something is that erosion of your soul
19:55that that it's that
19:58that rationalization that you bring up
20:00means that you have to carry around all
20:02this dissonance all the time of um you
20:04know what i'm a good person you know
20:06what i i do do the right thing you know
20:08this it just wasn't that clear this time
20:10and you always have to do those mental
20:11gymnastics and you have to carry that
20:13around all the time so i love that you
20:14drew that distinction of the cost that
20:16you bear for not speaking up um because
20:18i think a lot of times people focus on
20:20well look at all the stuff you have to
20:21deal with if you lose your job and you
20:23know people are accusing you of this or
20:24stuff like that but that cost on the
20:26other that other side is big and i love
20:28the way you speak about it and that
20:30that cost of rationalization to your
20:32point it like takes soul energy to keep
20:34that flywheel of rationalization going
20:36and
20:36at some point you're just a liar because
20:38you're just lying to yourself yeah no
20:40matter what you say to yourself right
20:42and you know in terms there's two
20:44examples of that within enron because
20:46you know cliff baxter did not like what
20:48was happening he was the head of mergers
20:51and acquisitions in iran he resigned in
20:53may of 2001 because he complained about
20:56enron doing business with the cfo's
20:59investment partnership it got nowhere he
21:01resigned
21:03he and he's the one that killed himself
21:05you know in his suicide note said there
21:07was once great pride now there is none
21:10but he was actually one of the good guys
21:12but did he beat himself up because he he
21:14didn't go to the press or didn't go to
21:16the sec interesting after he left the
21:18company but to his to his in his defense
21:21in 2001 there really weren't good
21:24mechanisms for that
21:26you know in terms of the sec didn't have
21:27their office of the whistleblower and
21:29things like that which is mind-boggling
21:31in and of itself by the way i know and
21:33ray bowen
21:35um was in was in the treasury finance
21:38world
21:39he had to settle with the sec neither
21:41confirming or denying wrongdoing he was
21:44banned from being a public company
21:45officer for five years had to pay a fine
21:48he was just getting out of that
21:50five-year ban
21:52and he died of a heart attack in his 50s
21:55wow
21:56you know so there's a cost of
21:58of doing the wrong thing or not speaking
22:01up
22:01um so it's it's really alarming but on
22:04the flip side
22:05you know
22:06if you turn around the martin luther
22:08king jr quote you know you can say that
22:11your life begins to soar the day you
22:13speak out about things that really
22:15matter wow and
22:17for me
22:19um you mentioned cs lewis you know
22:21there's a parable of the talents you
22:23know you're this wealthy master leaves
22:26some
22:27some talents with
22:29his servants heads out he comes back
22:31later what'd you do with them there's
22:32two servants that took a risk with the
22:34talents and double what they've been
22:36given
22:37and the message to them is come and
22:39share the master's happiness
22:41and the third one that just buried it
22:43and didn't do anything with it
22:44it's not so good what's said to him
22:46so
22:47that's that's sort of a
22:50you know almost a mantra for life take a
22:52risk with the talent you've been given
22:54speak up when it matters the most
22:57and spiritually some amazing things
22:59happen for you
23:01and i think that that's certainly been
23:02the case for me
23:04and i think it's been the case for other
23:06people that have taken taken a risk you
23:08know you end up
23:09i think you do have to be attuned to it
23:11but i've really had some miraculous cool
23:14mystical things happen as a result
23:17wow you know all the money that you get
23:20from compromising these values that can
23:22buy you a really nice bed but that can't
23:24buy you a good night's sleep and so
23:26what's the price on that you know the
23:28guy dies at 50 i mean that's that's
23:30crazy i mean stress had to be a factor
23:32there absolutely absolutely
23:34so i got a good question for you if i do
23:37say so myself um
23:39so whistleblowers are they born or made
23:43um
23:44i think a little bit of both
23:46i um
23:48i am just having a discussion
23:50with some other whistleblowing
23:52organizations about
23:54kind of it takes a village you know time
23:56magazine put
23:58the three of us on their cover and they
24:00in 2000 cynthia cooper from worldcom
24:02colleen raleigh from the fbi and of
24:05course we're all three women um but
24:07we're also all three first born primary
24:09breadwinners for our family
24:11people of faith but also we we the three
24:14of us grew up in small towns of less
24:16than ten thousand where it's kind of i
24:19think that made us optimistic that our
24:21actions matter you know you're a small
24:23child you hear your relatives talking
24:25about hey did you see somebody dump
24:27trash in the vacant lot off main street
24:29call the mayor you know there's sort of
24:31a sense that that you
24:33you can impact the health of your
24:35village but on the flip side
24:38you also can get caught doing something
24:40wrong and i mentioned that in
24:43an upcoming article for whistleblower
24:45network news
24:46that when i was young i wanted um
24:49um
24:51ice cream sandwiches and my mother said
24:52nope nope we're not getting that and i
24:55went to the freezer section opened up
24:57the ice cream sandwiches box took a few
24:59bites of one put it all back got a
25:01neighbor's phone
25:02you know so she told my mother she had
25:04to buy the box i got in trouble
25:06but they're sort of wrapped up in that
25:08you know the embarrassment and shame
25:10that you brought on your family you know
25:12that the neighbor saw you doing
25:14something so wrong that you shouldn't
25:15have done
25:17and does that scare you into uh i'm
25:19gonna stay on the straight and narrow
25:21path
25:22and i had this conversation with my boss
25:24when i lived in new york
25:25and he had a similar experience he had
25:28been hired um as a grounds crew person
25:31at newark his dad knew somebody he was
25:32like 15 16 got his first job
25:35and the um
25:36experienced grounds group people told
25:39him how they take naps in between the
25:41runways
25:42um and just you know kind of don't do
25:45their work take some naps
25:47so he did it he obviously didn't know
25:49which runways to choose from and which
25:52hour to take a nap and some pilot saw
25:55his body you know
25:57as he was landing so needless to stay he
26:00gets fired his dad's embarrassed and he
26:03attributed that childhood
26:06transgression with kind of scaring him
26:08straight
26:09you know so so i think you you're a
26:12little bit born with
26:14you know some idea of right and wrong
26:15but i think those childhood endeavors
26:17where it's not your parents
26:19catching you and someone else catching
26:21you and you kind of feel like you
26:22brought shame on the family
26:24that that helps
26:26um
26:27create
26:28whistleblowers yeah or at least people
26:30who are dedicated to straight path
26:33yeah it kind of puts that seed in you
26:34and you've seen that iterate a couple of
26:36times on the smaller chess board and
26:37when you get into this broader one those
26:39same principles translate into these new
26:41dynamics and these new people and you
26:43know
26:44uh more complexity and so forth
26:47yeah um i think it's really cool that
26:49you brought up the dynamic of that small
26:51town sharon because
26:53there's something that
26:55i think we're losing a little bit as the
26:57world progresses the way that it does
26:59the average company size is bigger the
27:01reach of the you know what you can do
27:04through the internet and where your
27:05customers are like everything's kind of
27:07dispersing and that kind of small town
27:10feel of you know the butcher and you
27:12know you know who runs the corner store
27:13and you know your families have been
27:15together for three generations or
27:17whatever
27:18that some of that is lost and there's
27:19something about that type of culture
27:21where i belong to a community the things
27:23that i do matter the way that i behave
27:26is not just
27:28it what hangs in the balance is not just
27:30whether i get in trouble for it or not
27:31and that kind of tight calculus of hey
27:34is it worth it you know to speak up for
27:35this but there are a bunch of other
27:37people who are going to be impacted
27:38positively or negatively by the things
27:41that i do and i think that
27:43if you live in too dispersed of a
27:44culture you know you grew up in a
27:46massive city where you never saw anybody
27:48again you know you you pass people on
27:49the street and you never see them again
27:51um i think that's something that
27:54corporate leaders
27:56would do well to foster and say hey you
27:57know what this is our tribe hey these
27:59are the people who matter the you know
28:01whether it's our customers our community
28:03or our employees or whatever it is that
28:05can get some more of this integrity
28:07right like integrity is these things all
28:09match up together right this stuff is
28:10all tightly intertwined um and i think
28:13that when when you when it becomes too
28:16transactional it becomes too much every
28:18man for himself and do i have a contract
28:20that's going to force me to do this you
28:22lose a lot of that ability for someone
28:24to just do the right thing because they
28:26know it's going to matter even if they
28:27can't draw a straight line to you know
28:29how their income is going to be
28:30different a month later i love how
28:32you've brought that into the
28:33conversation because that sense of
28:35community is a key to ethics right and i
28:37don't think that everyone always ties
28:38those together
28:40no i think you're exactly right i mean
28:42i'm a big proponent of
28:44internal audit being internal you know
28:47enron outsourced their whole internal
28:49audit department to arthur anderson loan
28:51staff i mean
28:52how does this look yeah it looks great
28:54all right
28:55glass yeah yeah double double check
28:58but you know that
28:59i mean the way it works informally you
29:02know there's always those get togethers
29:04this is the new class of 2022
29:07you know you might be going into
29:08internal audit someone else is going
29:10into sales but they have all those new
29:12employee get-togethers there's even
29:14rotations so what ends up happening are
29:16those really powerful informal lines of
29:20communication because you know david and
29:23tom know each other really well
29:25david ends up calling tom and says you
29:27know you're an internal audit when
29:28you're coming into my department next
29:30quarter you know i want you to pull
29:32these five transactions to review you
29:34didn't hear that from me i want you to
29:36look at it so the internal audit ends up
29:38catching a problem
29:40you know stopping it you know and that
29:42kind of that's because they're all in it
29:44together right um you know
29:47the guy in sales tried to get do it the
29:49right way something's gone wrong he's
29:51letting his buddy an internal audit know
29:53i want you guys to catch us
29:55yeah you know and so it works together
29:58to keep things on the tried and true
30:00yeah so then where do you think the
30:03idea or the ideal of loyalty
30:06comes into this discussion about
30:07whistleblowing and speak up culture and
30:10doing the right thing good question
30:12well i mean i i personally think
30:14whistleblowers generally are loyal to
30:16the
30:17company but they want the company to be
30:19doing it the right way they're almost
30:21looking down the road and saying what
30:23we're doing now is wrong
30:25um you know it's going to be a rough
30:27patch but we've got to come clean we've
30:28got to correct this for the long-term
30:30health of the of the company
30:33so i don't think they're disloyal it's a
30:36bad rap that whistleblowers get but i
30:39will say that the dodd-frank act that
30:41has this reward program for tips
30:43referrals complaints
30:45um it it greatly increases the
30:47likelihood a company will be getting
30:49caught if they do something wrong
30:51so i'm hoping that that provides an
30:53incentive for
30:55for companies to focus on their ethics
30:57compliance departments their risk
30:59management their internal audit
31:00departments because
31:02they're just not likely to get away with
31:04it like they used to
31:05yeah
31:06when you were going i i want to dive
31:09back let's go back in the way back the
31:11way back machine
31:12um as you were meeting these people
31:13before all of this popped off
31:15what kind of vibes were you getting any
31:18any sniffs you got to it or was it
31:20really just sort of like bottom up you
31:22looking at this bizarre whiteboard and
31:24not being able to get an answer in your
31:26analytical mind kind of saying this kind
31:28of stinks was it was it a confluence of
31:31things was it kind of a mosaic that came
31:33together or was there a particular
31:34moment where like the light bulb went
31:36off and you're just like
31:38you know
31:38like you're the scales fell from your
31:41eyes or something
31:42it's a little combination of both i mean
31:44the the the first meeting
31:48where you know these business unit guys
31:51were really explaining the raptors and
31:53there's no third party person involved
31:55it's just enron enron enron yeah um you
31:58know i'm shocked i'm concerned i'm
31:59dusting off my resume
32:01and two weeks later with jeff skilling
32:03quitting
32:04you know i write first an anonymous one
32:06page
32:08let you know memo
32:10my assistant drops it off an employee
32:12dropbox because ken lay was holding this
32:14huge company-wide meeting to address the
32:18shock of jeff skilling resigning
32:22and i heard all the right things in that
32:24meeting you know i go and identify
32:26myself but it's a whole week later that
32:28i'm going to be on kenley's calendar
32:30right and in that week i start putting
32:33out feelers to colleagues and employees
32:36co-workers that i trust
32:38and i i got an excel spreadsheet from
32:40one person that showed
32:42you know more evidence of the wrongdoing
32:45i got a powerpoint presentation that had
32:47been presented to the board of directors
32:49that was another piece of information
32:51right it's not about a dozen people kind
32:53of feeding me stuff yes you know here's
32:55more here's more did you know this
32:57happened or that happened include this
32:58in your in your talk with ken lang you
33:00know i meet with jeff mcmahon and he's
33:02like yes yes go speak to him go speak to
33:04him
33:05so
33:06there feels like there's this huge
33:08amount of support my mistake is i should
33:10have got gotten at least
33:12three of these vice presidents or
33:14managing directors you know like myself
33:16to go with me i was at the vice
33:18president level managing director is
33:20above that you know i should have gotten
33:22two or three more to go in with me so i
33:24wasn't one lone voice
33:26but you know to you know a lot of those
33:28people dropped me in the grease
33:30afterwards when they realized kenley did
33:32not want to hear what i was saying wow
33:35what did that feel like
33:37it was shocking well fall of 2001 was
33:40awful yeah you know just absolutely
33:43awful because i was dropped in the
33:44greece i didn't see enron forming this
33:46crisis management team and 911 happened
33:49right
33:50you know so
33:52everything just felt very you know
33:54unsettled yeah
33:56that's an understatement so was was that
33:59safe to say that that was one of the
34:00lowest points in your life or one of the
34:02biggest battles of your life
34:04um it clearly was because it
34:08it shocked me
34:09that more people weren't stepping
34:11forward and really saying yes this is
34:14wrong
34:15that's a big one
34:17yeah
34:18and
34:19it it was very disappointing you know i
34:22lost a lot of respect for for people
34:24that i i had admired
34:27you know or at least you know liked and
34:29respected and
34:31um it was just very disheartening yeah
34:34and
34:35i really was a little bit shocked
34:38because i use the titanic as an example
34:41too you know i'm i'm the crew person
34:43that sees we've hit an iceberg water's
34:44pouring in we're gonna sing you know
34:46lights are on band's playing but we're
34:48going to sink
34:49and so you go warn the captain you're
34:51expecting the alarm bells to go off
34:53business lines to be saved hoard cash
34:56and instead
34:58you know you you hear nothing
35:00and you really see the people in charge
35:02kind of
35:04elbowing their way into the wheelhouse
35:06who's going to be the next captain of
35:08the ship right you know and you're like
35:10so you're you want to be the captain of
35:12the sinking ship yeah
35:15i i really my emotions were very much
35:17probably like a crew member that found
35:19it to be shocking that nobody was
35:21sounding the alarm belts
35:22and what do you attribute that to like
35:25i'm i'm sure you know uh you don't have
35:28just
35:29a uh statistical split but like how much
35:32of that do you think people were in
35:33denial you think people you know kind of
35:36didn't want to let a good thing you know
35:39uh you know didn't want to let their job
35:41go right you know they were kind of in
35:43some plausible deniability or you said
35:45diffusion of responsibility like what do
35:47you think is that mix because i think
35:49it's a really interesting perspective
35:51there are a bunch of people in this
35:52ethics profession who are trying to
35:54prevent things like this from happening
35:56they give people training they implement
35:58policies they're trying to do their
35:59audits there's you know there's a mix of
36:01different personalities and perspectives
36:04and boldness and you know adherence to
36:06integrity around you
36:07like where do you think that line was in
36:09the people around
36:10you um i think it they had grown
36:13comfortable with enron's past successes
36:16right
36:17um there have been some people that have
36:19compared enron situation to also nasa's
36:23with the columbia uh shuttle um loss
36:27where nasa had had foam strikes you know
36:30where
36:31chunks had fallen off
36:33hit the shuttle and it had provided you
36:34know it didn't cause any problems
36:37and so
36:38the one the the big foam strike that hit
36:41a vulnerable part of the left wing
36:43there was a nasa engineer very concerned
36:46about that but he got nowhere because
36:48there was just such a we're fine we're
36:50fine that's not gonna be a big deal
36:52and he even predicted what was going to
36:53happen with that shuttle that you know
36:55if it really did what he thought it did
36:57it chunked off some of the heat shield
37:00upon re-entry
37:01that blasting heat was going to
37:04bore a bigger hole they would lose all
37:06sensors from the left side of the
37:08shuttle and within seconds lose
37:11communication with the whole shuttle
37:12which is what happened um
37:15and with enron i think
37:17there were people that just
37:19you know we're enron we'll get the right
37:21lines of credit we'll get the right you
37:23know liquidity
37:24um you know
37:26kind of bully our way through it um the
37:29company wrote off those raptor
37:31structures
37:32or at least they announced that they had
37:34an earnings release statement
37:36mid-october
37:37and it was just not something you can do
37:40accounting wise it's kind of like
37:41robbing the bank and then when the
37:43police stop you you just say well here's
37:44the money i haven't used any of it yet
37:46you know here it is you know sorry you
37:48know you're still going to be arrested
37:50um it was just something you cannot do
37:53and so that kind of struck me that who
37:55in the world is advising ken lay what
37:57lawyers what accountants are sitting
37:59around
38:00telling him that this is the best
38:02best avenue i mean i thought he could
38:05form the crisis management team face
38:07face the music or keep the fraud going i
38:09never thought they would try to write it
38:11off as a current period non-recurring
38:14write-off which literally accounting
38:16wise is like trying to
38:18hand the stolen goods back to the police
38:20and saying it's all there yeah
38:23yeah
38:24um i love that you bring in that issue
38:26of you know that hubris or something of
38:29uh yeah that might be a problem but i'm
38:31not going to get into it and we're going
38:32to be fine it's almost like
38:34to have a broad culture
38:36of ethical conduct there needs to be
38:38some humility that we are not
38:41above reproach this
38:43you know a scandal is not something that
38:45we are completely insulated from and
38:47that would never happen to us um i think
38:49that that's an interesting angle and
38:50something to
38:52try to impress upon the culture of don't
38:54assume that like the music's never gonna
38:56stop playing because you know it can
38:57happen to anybody yeah and life is
39:00fragile and everything's fragile and
39:02everything can fall apart so i mean
39:04enron's not even a going concern anymore
39:06irrespective of all the accolades they
39:07got and the golden boy of business and
39:10all those kinds of things it's not even
39:11around anymore it's it's a line at this
39:13point you know what i'm saying so every
39:14time arthur anderson's not around here
39:17there you go i mean uh yeah so i want to
39:20talk a little bit about
39:22what those what that next sort of
39:24chapter was like so you kind of sniff
39:26this thing out you
39:28get some good in intel some good
39:30insights you know part and as we talk
39:32about this i'd love to hear about some
39:34of the other things that you would have
39:35done differently because we're always in
39:36this sort of conflict and battle of like
39:38we want to give people a way to speak up
39:40to voice concerns
39:42you know we in our business we want to
39:44hear it all because reality is our
39:45friend and so forth there's some
39:47disconnect that happens as a company
39:48scales but as you're going through that
39:50that next chapter you talked to
39:52you talked to the chairman of the board
39:54things started moving and then at some
39:56point you have this label as a
39:58whistleblower on you i don't know how
39:59long that took but what was that next
40:01stage of
40:02of your journey like
40:04well so
40:05enron wrote off those raptor structures
40:08in
40:08an earnings call you know they
40:11they actually never filed their third
40:13quarter financial statements
40:15and the very next day the wall street
40:17journal had an expose article
40:19they had
40:20someone giving them information there's
40:22a whistleblower that was given the wall
40:24street journal some information
40:26and they hit enron with front page
40:29expose articles that wednesday thursday
40:32friday and by friday the sec was
40:34conducting an investigation
40:36enron really went radio silent they
40:38didn't explain themselves very well
40:41and the stock price just spiraled
40:43further down down down we went from like
40:45thirty three dollars a share to nine
40:47cents by the end of november wow lots of
40:49shareholder litigation filed you know
40:52problem
40:54after problem
40:55and
40:56i
40:57uh the company declared bankruptcy
41:00december first or second it was on a
41:01weekend and on december third on monday
41:05you know
41:06people are
41:08haul you know pulled together for big
41:10floor meetings and their managers tell
41:12them hey
41:13last friday was your last paycheck go
41:15back to your desk clear out your
41:16personal items and go
41:17no severance pay no medical insurance
41:20and i phoned up the head of hr i i
41:24really had no real job
41:26so i've been working for andy fastdown
41:28on the 49th floor which was you know
41:31part of our executive suites
41:33and i was moved down to hr on the 16th
41:35floor
41:36um no real assignments in this limbo
41:39period of of
41:41during the investigation quote unquote
41:44and um you know the head of hr said
41:46sharon if you didn't get a call over the
41:48weekend
41:49where you were asked to stay on to work
41:51for the bankruptcy estate you know
41:53you're you're gone too you know
41:56and i had been asked by an in-house
41:59lawyer to meet with the law firms that
42:01have been hired by enron
42:03in all these shareholder litigations so
42:05they had a law firm representing enron's
42:07board a law firm representing enron the
42:09corporation law firm representing enron
42:12executives
42:13and he had had me meeting with these
42:15lawyers now i understand that he had
42:18told them eventually
42:20you know the plaintiff is going to find
42:23sharon and find out what she's saying so
42:25this is kind of like what the opposing
42:27side is saying yeah you know can you
42:29understand it you know so i was kind of
42:31you know being being used to
42:34help defend enron i guess but this
42:37in-house lawyer said don't leave the
42:38building you know let me see if i can
42:40get you one more month of employment
42:42because you know if you're if you're
42:44walking out the door you're going to be
42:46hunting for a job and i really would
42:48like for you to still continue meeting
42:49with some of these law firms so he saved
42:52my job that day for about a month
42:54and mid-january is when congress
42:58found all that material that i'd given
43:00ken lay in august
43:02in a box of subpoenaed documents there
43:05were about 11 congressional
43:07investigations that were looking into
43:09why you know a company the size of enron
43:12had never really reported a losing
43:14quarter and poof they go bankrupt and
43:17shareholders were holding stock worth 60
43:19billion at the beginning of 2001 you
43:22know so in in one year a company goes
43:25from being worth 60 billion to nothing
43:27you know what happened
43:29and enron had
43:31was
43:32not
43:33trying to
43:35hide information as much as drown
43:38congress was too much they said they
43:40just were receiving you know rooms full
43:42of boxes
43:44um and poor some poor congressional
43:47staffer was probably stuck in a basement
43:50you know just going through everything
43:52and when they found my memos
43:54they released it to the press they also
43:57did some very direct subpoenas like
44:00we're going to ask vincent and elkins
44:01the law firm what did you do around
44:04these allegations are there anderson
44:06what did you do around these allegations
44:07enron what did you do
44:09so it kind of opened up the
44:12discovery process almost
44:15and that's when i was subpoenaed to
44:17testify in front of congress
44:19does that feel like some vindication for
44:21you
44:23well it was
44:25that and the most vindication came about
44:28from something known as the powers
44:29report
44:31and when enron was totally falling apart
44:34our asleep of the switch
44:36board of directors finally
44:39hired an outside law firm an outside
44:42accounting firm to investigate my
44:43concerns and to look into a few other
44:45things
44:46and they added bill powers to the board
44:49and he was running this
44:51this investigation
44:53and bill powers was the dean of the
44:55school of law at university of texas at
44:58austin
45:00and so this report has his name on it
45:02it's known as the powers report and they
45:04filed it early february 2002
45:08and that really vindicated me it
45:10basically said everything i had claimed
45:11was true and there's even some more
45:14rotten stuff
45:15so that felt safer i i was no longer the
45:19one lone voice that was saying enron had
45:22committed fraud
45:24yeah i mean how different would your
45:26life have been if that staffer didn't go
45:28into that archive box
45:30have you thought about that before um
45:33well yeah it'd be very different you
45:35know because i i think i would have
45:36worked at enron maybe a month or two
45:38more and then i would have been part of
45:40that 5 000 trying to find
45:43you know
45:44a job yeah
45:46so you definitely took the scenic route
45:51yeah
45:52so um
45:53walking into congress what was that like
45:55i mean it's kind of this interesting
45:57dynamic that you were kind of a part of
45:59because
46:00you
46:01it's almost like uh the allegiance can
46:04differ between your country and your
46:05government and you know what i find is
46:08that whistleblowers to your point are
46:09some of the most loyal people they're
46:11some of the most conscientious people
46:12they're the most value driven people and
46:14they're really being super loyal to this
46:17idea that of what the company is or the
46:19idea of what the company is supposed to
46:20be as stated on its values page or on
46:22its mission or something and yet there's
46:25this um this sort of paradox where
46:27management is maybe pushing in a
46:28different direction due to their own
46:30self-interest or something where there's
46:32this sort of like uh and i think this is
46:34why a lot of uh whistleblowers get
46:37blackballed which i'd love to talk about
46:38a little bit but um
46:41there's this interesting sort of uh
46:43dissonance between like the source of
46:45the loyalty and sometimes you think
46:47you're working you know you're trying to
46:49be loyal to the company when actually
46:50someone has sort of taken advantage of
46:51you and i think we saw an example of
46:53that as you were kind of brought in to
46:54help kind of build the defense
46:57when it became clear to you
46:59uh that okay hey you know
47:01there's kind of nothing to save you know
47:03there's no way to save this sinking
47:05titanic and then you're brought into
47:07congress what was that like walking in
47:09there and as you look down down the path
47:11where you're like okay i'm kind of in
47:12the grease now these guys pushed me in
47:14the grease what were those feelings like
47:16when you're like how do i get up out of
47:17this thing
47:18and kind of land back on my feet
47:21well it's interesting because they
47:23congress did subpoena
47:26ken lay
47:27um our risk management person richard
47:30bai rick causey our chief accounting
47:33officer andy bastow
47:35and
47:36they all pled the fifth you know i'm i
47:39you know they went there they held up
47:40their hand to tell the truth the whole
47:42truth and nothing but the truth but when
47:43asked questions
47:45you know they said i'm pleading the
47:46fifth fifth amendment jeff skilling did
47:49testify he was the only you know one of
47:52the only few executives but but a few
47:54others did too the lawyers testified
47:57jeff mcmahon testified
47:59and what i found in in watching and
48:02paying attention to their congressional
48:04testimony is they sure did they sure had
48:07trouble recalling a lot of things
48:10you know i just don't recall that or yes
48:13i know i wrote that down but you know
48:14that was four years ago or two years ago
48:18and for me when when i was called to
48:21testify you know you're sworn to tell
48:24the truth the whole truth and nothing
48:25but the truth
48:26and so i
48:28i kind of felt like i sure don't want to
48:30lie
48:31you know the truth that i know i'm
48:33supposed to tell the whole truth
48:35so
48:36it was a lot of testimony
48:38really pointing out where the problems
48:40were kind of helped mark the
48:42prosecutional trail
48:43on where enron had problems and
48:46at that point you know enron was already
48:49bankrupt you're really wanting the truth
48:51to come out so
48:52the guilty people might be held to
48:54account but that there might be some
48:56lessons learned from it right yeah
48:58that's a good point
49:00um
49:01i want to kind of dive into the label
49:04and you know
49:06you know very few whistleblowers that
49:07we've spoken to would say i wouldn't do
49:09it again because they're just those
49:10kinds of people
49:12um
49:13but
49:14how difficult was your life after you
49:16stood on your principles and how long
49:19did it take for whatever negative
49:21uh label or whatever
49:23that was attached to you for
49:25oddly paradoxically doing the right
49:27thing to kind of fall off you know what
49:30i mean
49:31um that's a great question i am
49:35i mean
49:37i'm the only whistleblower that has a
49:39great story
49:40you know all that congressional
49:42testimony
49:43um you know time put us on their cover
49:46i i
49:48had immediate speaking requests you know
49:50all over the country and you know i've
49:52been to some fantastic places around the
49:54globe talking about leadership and
49:56ethics so i have a very good story
50:00you know able to make a living on the
50:01lecture circuit but as i sought out
50:04corporate employment those doors would
50:06be shut and even
50:08i used to live two blocks from rice
50:10university and looked at participating
50:12in some of their executive sessions and
50:14their executive training and it looked
50:16like it was a big wide open door of
50:19opportunity
50:21until it until that door was slammed
50:23shut
50:23so i think it's taken almost 20 years
50:26for the full troublemaker aspect of it
50:29to wash off i mean as i mentioned i'm
50:32i'm now the executive in resident
50:35residence at texas state university
50:37first full-time job in 20 years
50:40um so that's a long time
50:43you know for that label to be to be
50:45washed off
50:47do you think that was a function of the
50:48time do you think that was the function
50:50of the era that we were in or do you
50:52feel like if you know hey dodd-frank's
50:54in place now if you were kind of
50:57you know if it was happening now do you
51:00feel like the world is sort of more
51:02um
51:03i don't know
51:04like responsive to this like or do you
51:06still think like if that happened today
51:07it would be 2042 before that label fell
51:10off you know you know what i'm asking
51:12here
51:12yes i do um well the beauty of
51:15dodd-frank is
51:16it does allow a would-be whistleblower
51:19to contact a lawyer and remain anonymous
51:22and the sec really works with that
51:24lawyer to try to make sure that their
51:26investigation and their inquiries
51:29within the company don't pinpoint who
51:31likely you know told them about the
51:33problems
51:34so it would be great they get a reward
51:37and they can hopefully stay employed at
51:38their company and their company starts
51:40doing the right thing
51:42but to me it's always been kind of hard
51:44to understand why
51:46but i spoke at a conference in 2003 at
51:49the aspen institute and i met um bob
51:52monk
51:53and he and nell minnow
51:55started institutional shareholder
51:56services they're in this kind of
51:58corporate governance leadership space
52:01and this was a reception cocktail
52:04conversation but he said you know you
52:05and cynthia cooper you know she's from
52:08worldcom you guys will never work in
52:10corporate
52:11america again
52:12and i'm like what you know particularly
52:14cynthia cooper who was head of internal
52:16audit and did everything the right way
52:18you know what do you mean we're not
52:19going to work in
52:21in our in corporate america again
52:23and she said he said eh
52:25people just see you walking down the
52:27hall
52:28and you make them feel bad
52:31you know something deep down in their
52:32subconscious says
52:34they they probably wouldn't have had the
52:36courage to speak up like you did so you
52:39just make them feel bad and they can
52:40find that skill set somewhere else wow
52:43you know
52:44and so maybe that's it but maybe that's
52:47it
52:48yeah i don't know like i it really
52:51it doesn't make sense to me that you
52:53know there's some psychology there of
52:54like i feel guilty i'm not as righteous
52:56as you you know uh hey you know let's
52:59get somewhere let's get someone else i
53:00kind of feel weird
53:02maybe that explains it you know i think
53:03a lot of people in our market you know
53:05people who are ethics experts compliance
53:07leaders who work in governance and audit
53:09and all of that you know i i think they
53:11see this the right way and they see hey
53:13you know what i'm not going to have
53:14a go ahead i completely agree with that
53:16i mean i think people that are in this
53:17space yeah
53:19would love to have me love to have
53:20cynthia cooper and i also think 90 of
53:23the people within an organization
53:26are very would be very exciting okay to
53:28have a whistleblower but it's that just
53:30that one person in leadership yeah that
53:33just mixes it
53:35you know it's just that one or two
53:36person person in the organization that's
53:39near the top
53:40that just says
53:43do we really know what their motivations
53:44were you know can we get this skill set
53:46elsewhere there's just too much baggage
53:49here
53:50i think most of the people in the
53:52organization would be happy to have us
53:53it's just that one or two and they
53:56happen to be powerful enough to squash
53:58it yeah i think that's an interesting
54:00perspective because i think a lot of
54:01people in our space who are ethics
54:03experts say hey you know what i'd love
54:05that and if it's so hard for
54:08whistleblowers to get hired i guess
54:10everyone else is against us and we're
54:11just kind of way on the other side of
54:13this line of integrity and i think you
54:15illustrate it well sharon that you know
54:17there are a bunch of people who would be
54:18for it but there's some politics and
54:20there's some power structures and you
54:22know there's some of that old boys club
54:24of hey you know what let's just not mess
54:26with this um which is really unfortunate
54:28and maybe it's changing and maybe the
54:30culture is changing but it you know i
54:32think part of the challenge with this
54:34whole whistleblower conversation and you
54:36know that really the travesty that you
54:38haven't had a full-time job for the past
54:4020 years because of this is it there's
54:43this tyranny of the minority that it
54:45does not have to be a majority decision
54:47to not employ a whistleblower one or two
54:50or a handful of people can scuttle that
54:52whole thing and then it's like all right
54:54start the recruiting process over again
54:56right
54:57yeah exactly and you know uh as an
55:00executive i think i can say this but
55:01there's an oversampling of sociopaths at
55:03the executive level so
55:07so the odds of someone being like put
55:10off by somebody who's quote unquote more
55:11righteous is just going to be higher and
55:13again there's more power concentrated
55:15there um it's just this bizarre paradox
55:17because some of our best teammates are
55:19people that have been whistleblowers in
55:20other places and we're definitely
55:22uh proponents of
55:24you know hiring whistleblowers and
55:26trying to like erase this stigma because
55:29i don't know it's you know
55:31you know i guess
55:32unless you're trying to hide stuff you
55:33don't want these people around or
55:34something you know yeah i mean i think
55:36that that's the natural assumption is
55:37like oh well i guess if i can't get
55:39hired here they must be trying to hide
55:41something they must be unethical um or i
55:43just imagine that some people you know
55:45i've wondered that myself like how can
55:46nobody want sharon watkins to work work
55:49for you right you know she's going to be
55:50honest you know she's going to stand up
55:52for the right thing you know you know
55:53it's not going to be a fox watching the
55:54hen house
55:55but i've wondered that same thing like
55:56okay well they have something to hide or
55:59you know they just you know don't want
56:00to get in the fray but i think that
56:02dynamic of it can just be a couple
56:04people who are uncomfortable or someone
56:06who you know casts you know some vague
56:08aspersions on your character and says ah
56:10well maybe you know you know maybe she's
56:12just bitter and she wanted to take him
56:13down or something like that um it
56:15doesn't take a lot to kind of mess this
56:17up yeah that's a good point
56:19yes yeah well this has been a really fun
56:21conversation um i don't know i've uh
56:24like i said i saw you when you were
56:26testifying to congress and i was like
56:27wow this is freaking amazing look at the
56:29courage that this person um is
56:31exhibiting and again you're kind of jump
56:33you kind of jump off the cliff and you
56:35don't know you don't know where you're
56:37going to land you don't know how long
56:38this label you know how you don't you
56:40don't know the implications of it is is
56:42is my point so it's great to talk to you
56:45it's great to pick your brain uh i feel
56:47like we could this could be like a three
56:48hour episode but it's been a lot of fun
56:51to hear your insights um as we part ways
56:55i have two questions for you one is if
56:57you go back in time to sharon
56:59before you know we talked about it a
57:01little bit but go back before that um
57:04you know to a young sharon who's maybe
57:05just coming out of undergrad or
57:07something what advice would you give
57:08yourself and then separately what advice
57:10would you give somebody who's witnessing
57:12some kind of malfeasance in their
57:13company but is a little bit scared to
57:16speak up and speak out
57:17about it
57:19okay great questions
57:21um well i do tell college students
57:24um you know see why people are excited
57:27to work at an organization you know what
57:29does the ceo say you know you're really
57:32looking for leadership
57:33that
57:34that really loves the products and
57:36services that they're producing you know
57:39that they're really
57:41um what they talk about you know is
57:43their employees their customers their
57:45products i mean you can think about
57:46steve jobs you know he was always
57:49talking about
57:50you know the
57:51ipod music or the latest mac
57:55um it was always about the products and
57:57jeff skilling was always talking about
57:59our stock price
58:00and
58:01i think also if people were to say oh
58:04why do you work here you know you're
58:05interviewing for a job at enron you know
58:08why do you work here well at enron
58:10international
58:11people would say you know it's very very
58:14inspiring and kind of fulfilling to go
58:17into a developing country that lacks
58:19reliable electricity and help
58:22yeah you know build electric plants you
58:24know where people now have
58:26you know water wells that run or
58:29comfort the creature comforts that we
58:31just take for granted yeah and if you
58:33ask some of the traders or some of the
58:35people that were in the in the areas
58:37under jeff skilling you'd hear more
58:39about you're you're going to make more
58:41money here than you've ever thought
58:43you'd make you know it's all about what
58:45what you were going to be taking home
58:47um so the wrong motivations and you know
58:49so you're really
58:50what motivates you to work here is a
58:52great question when you're interviewing
58:54you know
58:56at companies you know what what
58:58what makes the makes them excited to
59:01come to work and if it's all about stock
59:03price and personal compensation
59:05wrong place yeah um but in in terms of
59:10you know one thing i want to point out
59:12for people who find wrongdoing
59:14um
59:15i just love this reward program that's
59:18part of dodd-frank with the sec's office
59:21of the whistleblower because
59:23really 10 to 30 percent of sec fines now
59:27go towards whistleblowers and that has
59:29attracted legal talent to the cause of
59:32the whistleblower so someone runs across
59:34a problem
59:36they can actually you know just google
59:38whistleblower legal
59:40and they'll find some law firms that can
59:43give them some great advice help steer
59:45the course you know help map a plan for
59:47them and sometimes maybe they haven't
59:49found something wrong and they'll be
59:51able to bounce ideas up from office
59:54these lawyers to determine okay maybe i
59:56haven't found anything
59:57but the beauty of it too is you know i i
1:00:01first stumbled across
1:00:03very aggressive accounting at enron in
1:00:04late 96 and
1:00:06what
1:00:07what enron adopted as fair value
1:00:10accounting in 96
1:00:12was really the seeds of the later fraud
1:00:15and i did speak to some arthur anderson
1:00:17colleagues i got in trouble i spoke
1:00:19internally that i was against this you
1:00:22know i would have contacted a lawyer
1:00:23they would have contacted the sec the
1:00:26sec would have come in slapped enron on
1:00:28the wrist you know fined him enron would
1:00:31have stayed on a straight or straight
1:00:33and narrow path
1:00:34and i want to point out that i wouldn't
1:00:37be thinking wow i saved enron from
1:00:39bankruptcy and the sec wouldn't be
1:00:41thinking
1:00:42we saved shareholders from losing 60
1:00:44billion dollars right you know so we
1:00:46need to be respectful that the small
1:00:48things that get stopped
1:00:50are really perhaps preventing a huge
1:00:53problem
1:00:54and i think that's one of the main
1:00:55problems with ethics compliance risk
1:00:57management departments they don't get
1:01:00credit for the huge problems they've
1:01:01prevented
1:01:03that's great sharon i'm so glad you
1:01:04brought that up because
1:01:06that concept that it's hard to value or
1:01:09you just can't value the thing that you
1:01:11prevented um is really a big struggle
1:01:13that i think we have in ethics
1:01:15departments and in this profession of
1:01:18we're doing great work all the time
1:01:19right we're you know we're preventing
1:01:21fires we're you know
1:01:23there's
1:01:24there's a lot that we've discussed on
1:01:26the show about the cost that you bore as
1:01:28a whistleblower but the cost of this
1:01:30fraud you know what was it 5 000 people
1:01:33having to go look for new jobs moving
1:01:35their families around not making income
1:01:37you know all of the shareholder loss
1:01:38there that's the real thing that you
1:01:41know we're working all the time to
1:01:42prevent and it's so hard to
1:01:44to to really say hey you know what if i
1:01:47hadn't done this then three years from
1:01:48now there would be a 50 million dollar
1:01:50fine but we have to get into a place
1:01:52where we can
1:01:53advocate to our board our leadership to
1:01:55our finance departments around this is
1:01:57important and this is what's going to
1:01:59keep us from um that big problem down
1:02:02the line right and just as we wrap up
1:02:04sharon i appreciate you bringing up that
1:02:06that difficulty in valuing what you
1:02:08prevent um and i just i just want to say
1:02:10that for all the costs that you've borne
1:02:13for all of the time that you've spent
1:02:15not on your normal career path you know
1:02:17kind of dealing with all of the
1:02:18challenges the
1:02:19challenges that come
1:02:21you've been an inspiration to me i know
1:02:22that when i saw this happening i was
1:02:24like wow i can't imagine what that would
1:02:26be like to go up against that goliath
1:02:28and say hey you know what this is the
1:02:29right thing and i'm going to say the
1:02:31right thing you know and deal with the
1:02:33consequences i think a lot of times we
1:02:35talk about how you know whistleblowers
1:02:38you know have this reputation and you
1:02:40know you know how should we deal with it
1:02:42there are a lot of people and you know
1:02:43it may not be the ceos of all the
1:02:44companies there are a lot of people that
1:02:46see what you did and said you know what
1:02:48i want to be like that and i want to be
1:02:49someone who stands for what's right and
1:02:51i you know i just i really appreciate
1:02:53you
1:02:54modeling and living out those values so
1:02:56the rest of us can see hey you know what
1:02:57it can be done
1:02:59well thank you thank you that's a very
1:03:01kind words warms my heart i appreciate
1:03:04it
1:03:04um where can people find you um where
1:03:07can they find your book where can they
1:03:09sneak where where are you giving classes
1:03:12where can we sneak in
1:03:13and yeah
1:03:17well i am i am going to be doing some
1:03:19obviously i'm full time at texas state
1:03:22and san marcos texas but i do teach a
1:03:25weekend course at unc up the road from
1:03:27you guys
1:03:29i did it last february and i'll be doing
1:03:31it this coming february those were
1:03:32that's for mba students at
1:03:35uh keenan flagler there at ufc awesome
1:03:38very cool
1:03:39and so i'm
1:03:41you know i think these podcast
1:03:42opportunities are wonderful as well
1:03:45so i i'm um i i like the idea of getting
1:03:48getting the word out about what you know
1:03:50to would be whistleblowers
1:03:52yeah there's so much magic that can come
1:03:54from digesting the fact that reality is
1:03:56our friend in empowering people and
1:03:58giving them a voice to be these human
1:04:00sensors in our organization only then
1:04:02can we truly start to crowdsource risk
1:04:04management this is not a game of
1:04:05sweeping more dirt underneath a rug and
1:04:06hoping that you know it doesn't feel too
1:04:08lumpy as we're walking across it it's
1:04:09about having a clean floor you know what
1:04:11i'm saying yes exactly so anyways uh
1:04:14until next time thank you guys for
1:04:15joining
1:04:16[Music]
1:04:24us you

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