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The Ethics Experts Podcasts | Episode 100 with Sherron Watkins — Transcript

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0:04hello everybody welcome to the ethics
0:06experts if it's your first time joining
0:07us welcome and if you are a returning
0:09subscriber hello bestie i hope you're
0:11having an amazing day you see what
0:12happens when you subscribe to the ethics
0:14experts you get a bonus greeting on
0:15every single episode so absolute
0:16no-brainer to crush that subscribe
0:18button we are here today with a very
0:20special guest for our very special
0:22100th episode
0:24the one and only sharon watkins how are
0:26you sharon
0:27oh good thank you all for having me i'm
0:29quite honored to be on your 100th
0:31episode well thank you yeah everyone
0:32talks about this podcast because this is
0:34the highest rated uh ethics and
0:35compliance podcast in the world global
0:38globally and uh we're super excited to
0:40get you on so you first came on my radar
0:42when i was in undergrad majoring in
0:44accounting and finance when the whole
0:45enron scandal uh collapsed or when you
0:48you know when you speaking up and you
0:50showing that courage brought down one of
0:52the really really you know a golden
0:54child
0:55of uh of the economy so super excited to
0:58get you on our paths are are converging
1:01uh here we
1:02we we help a lot of ethics and
1:04compliance professionals uh we talk to a
1:06lot of whistleblowers and so you know
1:08who better for the hundredth episode
1:10than the one and only sharon watkins
1:13thank you
1:15so glad you're here sharon it's an honor
1:16to have you
1:18so let's just kind of dive in and jump
1:20in for people who've been living under a
1:21rock or people who are in the uh
1:24millennia or the uh the gen z generation
1:26why don't we start with your story how
1:28you kind of came to
1:30uh how your name came to be in the
1:32headlines and what that path was like
1:34through that that company
1:38well sure
1:39i had uh been in enron about eight years
1:42and frauds are quite often discovered
1:45when people switch positions you're kind
1:47of like the the person walking in the
1:49room saying hey what's this elephant
1:51maroon and everyone else has been trying
1:54to put up blinders and not not see that
1:56elephant
1:57and i i switched jobs
1:59stumbled across horrible fraud
2:03and i will say that enron used a lot of
2:05complexity in their accounting
2:07shenanigans
2:09and i quite often use the emperor's new
2:11clothes as an analogy about it you know
2:13where you've got an emperor focused on
2:16clothes and not running his kingdom and
2:18that really was ken lay our chairman and
2:20ceo he was focused more on politics on
2:24you know the outward image of
2:26of trying to bring
2:29gas-fired power to developing countries
2:33you know it's a little cleaner than coal
2:34or other things
2:36just focused on the outward image
2:38swindler's in that
2:40tail i consider to be jeff skilling and
2:42andy fast out jeff skilling was our
2:44chief operating officer and andy pastel
2:46was our chief financial officer
2:48so i considered them the swindlers
2:51but um in that fable
2:54you know you can't see the cloth if
2:56you're either stupid or not fit for your
2:58office
2:59you know so sort of some intimidation
3:01around this
3:02and that's kind of the way enron
3:04operated
3:05um jeff skilling used to have a famous
3:07saying of
3:09um
3:10hey
3:11um you know that person isn't smart
3:13enough to get it you know if you're
3:15asking too many questions the person
3:17we've hired the smartest finance minds
3:19in the country the smartest accounting
3:20minds
3:22legal minds you know you're going to
3:23keep asking questions and show you're
3:25too stupid to get it
3:27um so what happened was i stumbled
3:30across this fraud was dustin off my
3:33resume i just was like i've got to get
3:35out of here and within literally two
3:37weeks after finding this fraud jeff
3:39skilling quit the company
3:42so i felt like wow you know that's
3:45probably you know i probably know a
3:47deeper reason why he's leaving
3:49um
3:50you know let me
3:53let me go speak with ken lay chairman of
3:55the chairman of the board he's stepping
3:56back in the ceo he hasn't been paying
3:58attention to the details
4:00i thought skilling's resignation gave me
4:03credibility like maybe now you know you
4:06can believe
4:07this horrible thing i'm telling you
4:08because why else would someone like jeff
4:11skilling leave their dream job he's been
4:13at the company for 10 years he finally
4:14got the ceo spot january 2001 and eight
4:18months later he's quitting right
4:21so what was that like what was the
4:23reaction you got like
4:25and uh how surprising was that for you
4:28well it it was a i was really waking up
4:32two o'clock in the morning unable to go
4:33back to sleep rehearsing in my mind
4:36you know
4:37what could i tell ken lay to let him
4:39realize that arthur anderson this very
4:41well-respected auditing firm had really
4:44prostituted themselves you know it's
4:46hard to hard to believe a firm would
4:48would let first off you're really saying
4:51enron's committed accounting fraud but
4:53also arthur anderson has allowed it to
4:55happen
4:56and
4:57you know i thought i had
4:59the right memos the rights spreadsheets
5:02but what was crazy about it i had about
5:0530 minutes with him
5:06and he was listening and
5:09acting like okay he's taking me
5:11seriously
5:12but near the end he said
5:14well you think andy fasstown
5:17is doing a good job right the cfo he's
5:19doing a good job
5:21and that's just dumbfounded you know i'm
5:23sitting here telling you that your cfo
5:25has helped cook the books
5:27how can i possibly agree with you that
5:29he's doing a good job wow
5:31what a mind-boggling response
5:34yes yeah just want to make sure that you
5:36think he's he's so so what you're saying
5:38is he's a good cook
5:39he's great
5:43he's managed to fool a lot of people
5:45yeah i guess i mean i guess he's good at
5:47something so um leading up to that
5:49sharon
5:50like how quickly were you convinced
5:53of what you were sitting on because i
5:54imagine there are
5:56all of these people who had a sniff of
5:58this knew that it's that it was stinky
6:01you know turned
6:03a blind eye just said uh you know i'm
6:04sure someone else is checking that oh we
6:06get an audit so you know arthur anderson
6:09probably would have caught that i may be
6:10misinterpreting it what was your path to
6:12going from like whoa what's going on
6:13here too like i'm
6:15almost completely certain that there's a
6:17massive problem here well it
6:21there's sort of a two-fold answer to
6:22that question first off i started my
6:25career at arthur anderson and worked to
6:28being up to an experienced manager i
6:30worked in both the houston and new york
6:32offices
6:33and that eighth year when you're getting
6:35close to knocking on the door to make a
6:37partner
6:38they told all of us experienced managers
6:40that the number one criteria for you to
6:43make partner
6:44is if we took away your book of business
6:46you know all your auditing clients
6:48you could rebuild that book of business
6:50in one year wow wow so they're saying
6:53salesmanship
6:55you know
6:55is more important than technical
6:57proficiency your your commitment to
6:59auditing standards and accounting
7:01principles right so and then so i knew
7:04anderson had lost its way
7:07and then additionally
7:09um
7:10i had seen them sign off on some things
7:13in 96 that i thought were inappropriate
7:16but when i started meeting with people
7:19concerned with
7:20these raptor structures that i had
7:22stumbled across
7:24the answers were
7:25you know once again it's very complex
7:27lots of boxes on a white board but
7:31the raptors were supposed to be outside
7:33entities
7:34and they owed enron about 500 million
7:37dollars and the people explaining the
7:39structures
7:40said well the raptors are going to pay
7:42enron back by accessing and getting
7:45their hands on some enron stock that's
7:47kind of in these structures selling it
7:49in the marketplace and paying enron back
7:52and oh the stock isn't worth 500 million
7:54anymore it's worth about 200 so there's
7:56a hole here a 300 million dollar hole
7:59and i didn't hear where there was any
8:01outside money involved like who lost
8:03money yeah enron's lost money we haven't
8:06reported it in our financial statements
8:08but the way we're covering that loss is
8:11you know more
8:12more enron stock selling in ron stock in
8:14the marketplace who's the third party
8:17that that lost money
8:19and
8:20people trying to explain it to me
8:22finally would just give up and say hey
8:24we're not accountants arthur anderson's
8:26blessed it must be okay okay right
8:28yeah because that was kind of my
8:30follow-up question of that it seems like
8:32you you know we talk within our company
8:34about this value of common sense right
8:36you don't need to have a phd you don't
8:39need to be a rocket scientist to kind of
8:41figure out like hey you know at some
8:44point this is a closed system so it's
8:46got to go somewhere it seems like you
8:47had that common sense but you know
8:50i think my question is c.s lewis has
8:52this idea of the inner ring of there are
8:54people very close to something that know
8:56exactly what's going on and then there
8:58are all these concentric circles of
9:00someone's kind of in on it or you know
9:01someone kind of has some blinders what
9:03do you think was the range you know
9:05uh you know i'll just maybe lead it here
9:07i imagine not every employee at enron
9:10other than you was completely in on it
9:11and had signed off on it but what do you
9:13think is that mix of the people around
9:15you i think you mentioned some people
9:16just saying hey we're not accountants
9:18but you know how does something this big
9:20happen and where do you think kind of
9:21people around you could have noticed it
9:24or been brave enough to speak up and
9:25they didn't
9:27well and i think those are great points
9:28that inner ring the people that really
9:31knew
9:32that it was wrong i'd say it was not
9:34even a half a dozen people wow
9:36um ben glisson
9:38was a an accountant
9:40um hired out of the industry accounting
9:42industry to work at enron for andy fast
9:44out and he helped structure some of
9:46these things and he was one of the first
9:48to plead guilty you know he just he like
9:51i know this is bad they're gonna
9:52eventually find out it's bad so i'm just
9:54gonna be first in line and get the best
9:56deal okay
9:57um i i just think not too many people
9:59were really understanding it and it
10:02falls into that
10:04arena of just this isn't my role i don't
10:07quite understand it but your point that
10:11none of this is that complex
10:13and if
10:14if if you can't explain it to a first
10:17grader
10:18or if you're on the other side of the
10:20table and someone's trying to explain it
10:21to you
10:22if they can't explain it
10:24either they don't understand it or it's
10:26intentionally opaque it's intentionally
10:29complex they are trying to just wear you
10:31down to where you just give up and
10:34and do that diffusion of responsibility
10:36excuse well anderson's blessed it must
10:38be okay
10:40um so i think and the reason that latter
10:43problem existed is enron had a rank and
10:46yank review system
10:48you were it was pretty brutal you were
10:50evaluated twice a year what have you
10:52done for enron lately so people that
10:54were not in the accounting department
10:56would just say
10:57hey you know i'm not getting good
10:58answers i don't feel good in my gut
11:00about this but i'm not in the accounting
11:02department it's not my job what have i
11:04done for enron lately i got to go focus
11:05on my next deals right
11:08yeah and
11:09you need a certain confidence interval
11:11or a certain courage to step out or step
11:13into something that's sort of outside of
11:14your realm i mean at the end of the day
11:16i think people are most concerned about
11:17themselves their personal safety or
11:19whatever which can obviously translate
11:21into keeping them you know keeping their
11:23mortgage paid and keeping their kids fed
11:25and stuff like that so it becomes kind
11:27of easy especially on something that's
11:28intentionally opaque to your point um
11:30for them to say you know what i can't
11:31really spend a lot of more calories on
11:33this it's not even my area again we have
11:36you know one of the big five at that
11:37time you know blessing the thing so you
11:39know kind of move on keep your job and
11:41don't fall at the bottom of that rank
11:43and yank uh hierarchy you know what i
11:44mean
11:46exactly but you know then the problem
11:47becomes you know the department of
11:49justice has
11:51over two dozen felons associated with
11:53enron
11:54and
11:55you know only only a handful are the
11:57perpetrators of the fraud
11:59the rest are sort of unwilling
12:01participants you know those people that
12:03weren't getting good answers but just
12:05said hey it's not my job
12:06additionally there's a whole host
12:09that had to pay
12:10hefty legal fees
12:12trying to make sure they weren't
12:13indicted
12:14yeah so there was quite a cost to going
12:16along
12:18yeah and it's a cost that people don't
12:20think they're going to have to uh bear
12:22is the point i mean there there's a bet
12:24being made at at all times right you're
12:27making a bet on hey you know i'm not
12:29gonna get in a bad spot from you know
12:32not speaking up or
12:34you know whatever
12:35whatever the expected value of this sort
12:37of uh game is
12:39uh so to speak and boy that can really
12:41go left when you're sitting there uh in
12:43the courtroom racking up you know
12:45there's ten thousand dollars per hour
12:46probably more when you look at your
12:48legal team sitting next to you with the
12:50legal pads
12:51uh it's very fragile it can fall apart
12:53very quickly and again like i was i'm
12:55just fascinated by the enron thing
12:56because it was like my first picture of
12:59uh you know this thing that glitters is
13:01not actually gold you know as i'm sort
13:03of learning about business and stuff
13:04like that um and it's uh recently a
13:07couple of things have been popping up on
13:09some like social feeds of like this
13:11forbes picture this forbes cover of like
13:14you know america's best companies and
13:15it's enron and it's got the ceo on it
13:17and it's like boy this did not age that
13:18well but again from the surface you
13:21don't know what's going on inside the
13:22company just like you don't know what's
13:23going on in somebody's house you know
13:24what i'm saying you don't you don't you
13:26don't know what's happening behind those
13:27four walls and you can't tell from
13:28looking at that glossy cover the type of
13:31incentives that leadership is sort of
13:34imposing on the organization either
13:36explicitly or implicitly by some of
13:37these tactics that that we're talking
13:39about i find it super interesting though
13:41that you go to the chairman and it again
13:44i don't know like these guys very
13:46detailed but
13:47it doesn't sound like the chairman had a
13:49different that different of a view than
13:50the ceo you know what i'm saying like
13:53the same tactics were kind of employed
13:55against you maybe a different flavor of
13:56them to kind of stiff-arm you to kind of
13:58shut you up and so forth so it's like
14:00that tone from the top has such a
14:03massive impact on the lives and how
14:05people live out those lives throughout
14:07the organization
14:08oh you're exactly right i mean i i
14:11back to the emperor's new clothes
14:13i had jeff mcmahon a former treasurer
14:16encouraging me to meet with lay you know
14:18i had met with him and he told me some
14:20additional information he said i'll put
14:22a call in i'll tell him your your you've
14:24got credible concerns and he should
14:26listen to you
14:28um you know i was i was encouraged to go
14:30meet with with ken lane
14:33and all this is between you know jeff
14:34skilling leaving a week later when i'm
14:36on ken lay's calendar yeah and it's
14:39almost like i am meeting with ken lay
14:40saying you're the emperor you know
14:42you're being swindled you've got on no
14:44clubs and ken lay could have turned to
14:46the executives right underneath them and
14:49said you know could she be right are we
14:51exposed if we cook the books but i think
14:54instead he turned to the executives
14:56around him and said hey
14:58you know we're paying anderson 52
15:00million dollars a year to audit us one
15:03million dollars a week i better be
15:05clothed you know for that amount of
15:07money yeah and they were like hey you
15:09know you're you're i'm sure you are
15:11anderson's the clothing expert not me
15:14um so he sent out the vibe
15:16that
15:18what sharon watkins is telling me better
15:20not be true
15:21right
15:22so i think people were ready and willing
15:25to kind of back me up but then they read
15:27the tea leaves and back down
15:29yeah and i think it you know gets to
15:32core values that are so important to
15:33this right like there are all these
15:35layers of how you impact uh a situation
15:38like this right it can be policies it
15:40can be audits it can be enforcement it
15:41can be culture but you know i think
15:44within that answer is an expression of
15:47this value of she better not be right
15:50just like you were talking about that at
15:51anderson it was like you better get
15:53billings and you better be able to bring
15:54in revenue because that is the value
15:56that's going to win the day
15:58um and you know i think that you saw
16:01that expressed in that answer right
16:02where he's like not you know the the
16:05value is not integrity or truth or hey
16:07let's make sure that like we come clean
16:09if we mess something up the value is hey
16:11someone better uh protect me which we
16:14kind of talk about as like compliance
16:151.0 of compliance and ethics you know
16:18like we talked about it being in the 90s
16:20the
16:2190s compliance and ethics was keep the
16:22boss out of jail and it's progressed a
16:24lot past that but that's like that's
16:27like the epitome of this thing of like
16:28hey i better be protected here
16:31i know i know and you know on the whole
16:33ethics front it seems like there's great
16:35tools to do employee surveys you know to
16:38figure out really what's going on
16:40underneath the surface but too many
16:42companies
16:43don't even want to know right you know
16:44they don't employ these rather
16:46simplistic
16:47not not very expensive tools keep the
16:50lie alive is maybe what some companies
16:53should put on their value statement you
16:54know they want to keep the lie alive you
16:56know they don't want to they don't want
16:58to know
16:59and
17:00it really makes it hard for
17:02whistleblowers and we've had some other
17:04whistleblowers on the podcast and we've
17:06had some chats with those folks
17:09and many of them have said
17:11you know i didn't know what i was
17:12getting into but if i had the
17:14opportunity to do it again i probably
17:16would still do the same thing how do you
17:17feel about
17:18that decision
17:20that you made
17:22well it's it's very ironic that enron's
17:24core values were respect
17:27integrity communication and excellence
17:29and on that
17:30communication value
17:33the little notepads and desk toys that
17:35we would have
17:36um was a martin luther king jr quote
17:39that our lives begin to end the day we
17:41remain silent about things that really
17:43matter
17:44and so unpacking that quote
17:47you know what do you mean your lives
17:49begin to end
17:50um and what he really means is you know
17:52your soul is eroding yeah right your
17:54ability to think highly of yourself you
17:57know and what you stand for and what
17:58your purpose is
18:00you know sort of erodes
18:02and i've seen that with some of my enron
18:04colleagues
18:05um the ones that
18:08you know weren't not the one some of the
18:10ones that mentally are healthier or the
18:12ones that pled guilty and went to prison
18:14for a couple years because they've kind
18:16of come to terms with their role in
18:18enron's fraud but the ones that weren't
18:20indicted kind of fought it
18:22they're now coming out on
18:25the excuse that the government was
18:26abusive or you know made made a mountain
18:29out of a mohill they're having to
18:31rationalize how they weren't involved in
18:33something bad
18:35and that rationalization i think erodes
18:37your soul
18:38you know causes causes stress and
18:41everything else
18:43um it's
18:45it's um
18:47[Music]
18:49i think it's it's more for me i would do
18:52things a little more differently
18:54but
18:55i think when an ethical challenge lands
18:57on your lap
18:59you can't compare your life to what it
19:01was before the ethical challenge
19:03you know it will never be that way again
19:05a challenge is landed on your lap and
19:07it's best to
19:08be fearless to address it to speak up
19:11and try to get it corrected
19:13because that's the path where you're
19:16you're going to be most proud of
19:17yourself versus trying to cover up or
19:19ignore it wow i really love the way that
19:22you talk about that sharon because you
19:24know i think a lot of times
19:26when people talk about this or when
19:28people consider it the the
19:30distinction is
19:32well what is going to cost me if i speak
19:33up
19:34and how does that compare to what my
19:36life is going to be if i don't and it's
19:38thought of like well hey i had to deal
19:40with all of this you know people
19:41slinging mud at me and i was you know
19:43kind of blackballed from the industry or
19:44whatever it is look at the cost of
19:46speaking up but i love that you've
19:47highlighted the cost of not saying
19:49something is that erosion of your soul
19:51that that it's that
19:53that rationalization that you bring up
19:56means that you have to carry around all
19:57this dissonance all the time of um you
20:00know what i'm a good person you know
20:02what i i do do the right thing you know
20:04it just wasn't that clear this time and
20:05you always have to do those mental
20:07gymnastics and you have to carry that
20:08around all the time so i love that you
20:10drew that distinction of the cost that
20:12you bear for not speaking up um because
20:14i think a lot of times people focus on
20:15well look at all the stuff you have to
20:16deal with if you lose your job and you
20:18know people are accusing you of this or
20:20stuff like that but that cost on the
20:22other that other side is big and i love
20:23the way you speak about it and that
20:25that cost of rationalization to your
20:27point it like takes soul energy to keep
20:29that flywheel of rationalization going
20:31and
20:32at some point you're just a liar because
20:34you're just lying to yourself yeah no
20:35matter what you say to yourself right
20:38and you know in terms there's two
20:39examples of that within enron because
20:41you know cliff baxter did not like what
20:44was happening he was the head of mergers
20:46and acquisitions in iran he resigned in
20:49may of 2001 because he complained about
20:52enron doing business with the cfo's
20:54investment partnership it got nowhere he
20:57resigned
20:58he and he's the one that killed himself
21:00you know in his suicide note said there
21:02was once great pride now there is none
21:06but he was actually one of the good guys
21:07but did he beat himself up because he he
21:10didn't go to the press or didn't go to
21:11the sec interesting after he left the
21:13company but to his to his in his defense
21:17in 2001 there really weren't good
21:19mechanisms for that
21:21you know in terms of the sec didn't have
21:23their office of the whistleblower and
21:25things like that which is mind-boggling
21:27in and of itself by the way i know and
21:29ray bowen
21:30um was in was in the treasury finance
21:33world
21:34he had to settle with the sec neither
21:37confirming or denying wrongdoing
21:39he was banned from being a public
21:41company officer for five years had to
21:42pay a fine
21:44he was just getting out of that
21:46five-year ban
21:48and he died of a heart attack in his 50s
21:50wow
21:51you know so there's a cost of
21:54of doing the wrong thing or not speaking
21:56up
21:57um so it's it's really alarming but on
22:00the flip side
22:01you know
22:02if you turn around the martin luther
22:04king jr quote you know you can say that
22:06your life begins to soar the day you
22:09speak out about things that really
22:11matter wow and
22:13for me
22:14um you mentioned cs lewis you know
22:17there's a parable of the talents you
22:19know you're this wealthy master leaves
22:21some
22:22some talents with
22:24his servants heads out he comes back
22:26later what'd you do with them there's
22:28two servants that took a risk with the
22:29talents and doubled what they'd been
22:32given
22:33and the message to them is come and
22:34share the master's happiness
22:36and the third one that just buried it
22:38and didn't do anything with it
22:40it's not so good what's said to him
22:42so
22:43that's that's sort of a
22:45you know almost a mantra for life take a
22:47risk with the talent you've been given
22:50speak up when it matters the most
22:52and spiritually some amazing things
22:55happen for you
22:57and i think that that's certainly been
22:58the case for me
23:00and i think it's been the case for other
23:01people that have taken taken a risk you
23:04know you end up
23:05i think you do have to be attuned to it
23:07but i've really had some miraculous cool
23:09mystical things happen as a result
23:13wow you know all the money that you get
23:15from compromising these values that can
23:18buy you a really nice bed but that can't
23:19buy you a good night's sleep and so
23:22what's the price on that you know the
23:23guy dies at 50 i mean that's that's
23:26crazy i mean stress had to be a factor
23:27there absolutely absolutely
23:30so i got a good question for you if i do
23:32say so myself um
23:34so whistleblowers are they born or made
23:39um
23:39i think a little bit of both
23:42i um
23:43i am just having a discussion
23:46with some other whistleblowing
23:48organizations about
23:50kind of it takes a village you know time
23:52magazine put
23:53the three of us on their cover and they
23:56in 2000 cynthia cooper from worldcom
23:58colleen raleigh from the fbi and of
24:00course we're all three women
24:02but we're also all three first born
24:04primary breadwinners for our family
24:07people of faith but also we we the three
24:09of us grew up in small towns of less
24:12than ten thousand
24:13where it's kind of i think that made us
24:15optimistic that our actions matter you
24:18know you're a small child you hear your
24:20relatives talking about hey did you see
24:22somebody dump trash in the vacant lot
24:24off main street call the mayor you know
24:26there's sort of a sense that that you
24:28you can impact the health of your
24:30village but on the flip side
24:33you also can get caught doing something
24:35wrong and i mentioned that in
24:38an upcoming article for whistleblower
24:40network news
24:42that when i was young i wanted um
24:45um
24:46ice cream sandwiches and my mother said
24:48nope nope we're not getting that and i
24:50went to the freezer section opened up
24:52the ice cream sandwiches box took a few
24:54bites of one put it all back at a
24:56neighbor's spot
24:58you know so she told my mother she had
24:59to buy the box i got in trouble
25:02but they're sort of wrapped up in that
25:04you know the embarrassment and shame
25:06that you brought on your family you know
25:08that the neighbor saw you doing
25:09something so wrong that you shouldn't
25:11have done
25:12and does that scare you into uh i'm
25:15gonna stay on the straight and narrow
25:16path
25:17and i had this conversation with my boss
25:19when i lived in new york
25:21and he had a similar experience he had
25:23been hired um as a grounds crew person
25:26at newark his dad knew somebody he was
25:28like 15 16 got his first job
25:31and the um
25:32experienced groundskeep group people
25:34told him how they take naps in between
25:36the runways
25:38um and just you know kind of don't do
25:41their work take some naps
25:42so he did it he obviously didn't know
25:45which runways to choose from and which
25:48hour to take a nap and some pilot saw
25:50his body
25:51you know
25:52as he was landing so needless to stay he
25:55gets fired his dad's embarrassed and he
25:58attributed that childhood
26:01transgression with kind of scaring him
26:03straight
26:05you know so so i think you you're a
26:07little bit born with
26:09you know some idea of right and wrong
26:11but i think those childhood endeavors
26:13where it's not your parents
26:15catching you and someone else catching
26:17you and you kind of feel like you
26:18brought shame on the family
26:20that that helps
26:21um
26:22create whistleblowers yeah or at least
26:25people who are dedicated to straight
26:27path
26:28yeah it kind of puts that seed in you
26:30and you've seen that iterate a couple of
26:31times on the smaller chess board and
26:33when you get into this broader one those
26:34same principles translate into these new
26:37dynamics and these new people and you
26:38know
26:39uh more complexity and so forth
26:42yeah um i think it's really cool that
26:45you brought up that the dynamic of that
26:47small town chair and because
26:49there's something that
26:51i think we're losing a little bit as the
26:53world progresses the way that it does
26:55the average company size is bigger the
26:57reach of the you know what you can do
26:59through the internet and where your
27:01customers are like everything's kind of
27:03dispersing and that kind of small town
27:05feel of you know the butcher and you
27:07know you know who runs the corner store
27:09and you know your families have been
27:11together for three generations or
27:12whatever
27:13that some of that is lost and there's
27:15something about that type of culture
27:17where i belong to a community the things
27:19that i do matter the way that i behave
27:22is not just
27:23it what hangs in the balance is not just
27:25whether i get in trouble for it or not
27:27and that kind of tight calculus of hey
27:29is it worth it you know to speak up for
27:31this but there are a bunch of other
27:32people who are going to be impacted
27:34positively or negatively by the things
27:36that i do and i think that
27:38if you live in too dispersed of a
27:40culture you know you grew up in a
27:41massive city where you never saw anybody
27:43again you know you pass people on the
27:45street and you never see them again um i
27:47think
27:48that's something that
27:50corporate leaders
27:51would do well to foster and say hey you
27:53know what this is our tribe hey these
27:55are the people who matter the you know
27:56whether it's our customers our community
27:58or our employees or whatever it is that
28:00can get some more of this integrity
28:03right like integrity is these things all
28:04match up together right this stuff is
28:06all tightly intertwined um and i think
28:09that when when you when it becomes too
28:11transactional it becomes too much every
28:14man for himself and do i have a contract
28:16that's going to force me to do this you
28:17lose a lot of that ability for someone
28:20to just do the right thing because they
28:21know it's going to matter even if they
28:23can't draw a straight line to you know
28:25how their income is going to be
28:26different a month later i love how
28:28you've brought that into the
28:29conversation because that sense of
28:31community is a key to ethics right and i
28:33don't think that everyone always ties
28:34those together
28:36no i think you're exactly right i mean
28:37i'm a big proponent of
28:40internal audit being internal you know
28:42enron outsourced their whole internal
28:44audit department to arthur anderson loan
28:47staff i mean
28:48how does this look yeah it looks great
28:50all right
28:50glass yeah yeah double double check
28:52double bill
28:53but you know that
28:55i mean the way it works informally you
28:57know there's always those get togethers
28:59this is the new class of 2022
29:02you know you might be going into
29:04internal audit someone else is going
29:05into sales but they have all those new
29:08employee get togethers there's even
29:09rotations so what ends up happening are
29:12those really powerful informal lines of
29:16communication because you know david and
29:18tom know each other really well
29:20david ends up calling tom and says you
29:22know you're an internal audit when
29:24you're coming into my department next
29:25quarter you know i want you to pull
29:27these five transactions to review you
29:30didn't hear that from me i want you to
29:31look at it so the internal audit ends up
29:34catching a problem
29:36you know stopping it you know and that
29:38kind of that's because they're all in it
29:40together right um you know
29:42the guy in sales tried to get do it the
29:45right way something's gone wrong he's
29:46letting his buddy an internal audit know
29:48i want you guys to catch us
29:50yeah you know and so it works together
29:53to keep things on the tried and true
29:56yeah so then where do you think the
29:58idea or the ideal of loyalty
30:02comes into this discussion about
30:03whistleblowing and speak up culture and
30:05doing the right thing good question well
30:08i mean i i personally think
30:09whistleblowers generally are loyal to
30:12the
30:13company but they want the company to be
30:15doing it the right way they're almost
30:16looking down the road and saying what
30:18we're doing now is wrong
30:20um you know it's going to be a rough
30:22patch but we've got to come clean we've
30:24got to correct this for the long-term
30:26health of the of the company
30:28um so i don't think they're disloyal
30:31it's a bad rap that whistleblowers get
30:34but i will say that the dodd-frank act
30:37that has this reward program for tips
30:39referrals complaints
30:40um it it greatly increases the
30:42likelihood a company will be getting
30:44caught if they do something wrong
30:47so i'm hoping that that provides an
30:49incentive for
30:50for companies to focus on their ethics
30:53compliance departments their risk
30:55management their internal audit
30:56departments because
30:58they're just not likely to get away with
30:59it like they used to
31:01yeah
31:02when you were going i i want to dive
31:05back let's go back in the way back the
31:06way back machine um as you were meeting
31:09these people before all of this popped
31:10off
31:11what kind of vibes were you getting any
31:13any sniffs you got to it or was it
31:15really just sort of like bottom up you
31:18looking at this bizarre white board and
31:20not being able to get an answer in your
31:22analytical mind kind of saying this kind
31:24of stinks was it was it a confluence of
31:27things was it kind of a mosaic that came
31:29together or was there a particular
31:30moment where like the light bulb went
31:32off and you're just like
31:33you know
31:34like you're the scales fell from your
31:36eyes or something
31:38it's a little combination of both i mean
31:40the
31:41the the first meeting
31:44where you know these business unit guys
31:46we're really explaining the raptors and
31:48there's no third party person involved
31:51it's just enron enron enron yeah um you
31:53know i'm shocked i'm concerned i'm
31:55dusting off my resume
31:57and two weeks later with jeff skilling
31:59quitting you know i write first an
32:01anonymous one page
32:03let you know memo
32:05my assistant drops it off an employee
32:07dropbox because ken lay was holding this
32:10huge company-wide meeting to address the
32:14shock of jeff skilling resigning
32:17um and i heard all the right things in
32:19that meeting you know i go and identify
32:21myself but it's a whole week later that
32:23i'm going to be on kenley's calendar
32:26right and in that week i start putting
32:29out feelers to colleagues and employees
32:31co-workers that i trust
32:33and i i got an excel spreadsheet from
32:36one person that showed
32:38you know more evidence of the wrongdoing
32:40i got a powerpoint presentation that had
32:42been presented to the board of directors
32:45that was another piece of information
32:46right it's not about a dozen people kind
32:48of feeding me stuff yes you know here's
32:51more here's more did you know this
32:52happened or that happened include this
32:54in your in your talk with ken lang you
32:56know i meet with jeff mcmahon and he's
32:57like yes yes go speak to him go speak to
32:59him
33:00so
33:01there feels like there's this huge
33:04amount of support my mistake is i should
33:05have got gotten at least
33:08three of these vice presidents or
33:09managing directors you know like myself
33:12to go with me i was at the vice
33:14president level managing director is
33:16above that you know i should have gotten
33:18two or three more to go in with me so i
33:19wasn't one lone voice
33:21but you know to you know a lot of those
33:24people dropped me in the grease
33:26afterwards when they realized kenley did
33:28not want to hear what i was saying wow
33:31what did that feel like
33:33it was shocking well fall of 2001 was
33:36awful yeah you know just absolutely
33:38awful because i was dropped into greece
33:40i didn't see enron forming this crisis
33:42management team and 9 11 happened right
33:46you know so
33:47everything just felt very you know
33:50unsettled yeah that's an understatement
33:53so was was that safe to say that that
33:55was one of the lowest points in your
33:57life or one of the biggest battles of
33:58your life
33:59um it clearly was
34:01because it
34:03it shocked me
34:05that more people weren't stepping
34:06forward and really saying yes this is
34:09wrong
34:10yeah i am that's a big one
34:12yeah
34:13and
34:14it it was very disappointing you know i
34:18lost a lot of respect for for people
34:20that i i had admired
34:22you know or at least you know liked and
34:25respected and
34:27it was just very disheartening yeah and
34:31i really was a little bit shocked
34:33because
34:34i used the titanic as an example too you
34:37know i'm i'm the crew person that sees
34:39we've hit an iceberg water's pouring in
34:40we're going to sing you know lights are
34:42on bands playing but we're going to sink
34:45and so you go warn the captain you're
34:47expecting the alarm bells to go off
34:49business lines to be saved hoard cash
34:52and instead
34:53you know you you hear nothing
34:56and you really see the people in charge
34:58kind of
34:59elbowing their way into the wheelhouse
35:02who's going to be the next captain of
35:03the ship right you know and you're like
35:06so you're you want to be the captain of
35:07the sinking ship yeah i want to go down
35:09with this ship yeah
35:10i i really my emotions were very much
35:13probably like a crew member that found
35:15it to be shocking that nobody was
35:16sounding the alarm belts
35:18and what do you attribute that to like
35:20i'm i'm sure you know uh you don't have
35:23just
35:24a uh statistical split but like how much
35:28of that do you think people were in
35:29denial you think people you know kind of
35:32didn't want to let a good thing you know
35:34uh you know didn't want to let their job
35:37go right you know they were kind of in
35:38some plausible deniability or you said
35:41diffusion of responsibility like what do
35:43you think is that mix because i think
35:44it's a really interesting perspective
35:47there are a bunch of people in this
35:48ethics profession who are trying to
35:50prevent things like this from happening
35:51they give people training they implement
35:53policies they're trying to do their
35:55audits there's you know there's a mix of
35:57different personalities and perspectives
35:59and boldness and you know adherence to
36:01integrity around you
36:03like where do you think that line was in
36:05the people around you
36:07um i think it they had grown comfortable
36:10with enron's past successes right
36:13um there have been some people that have
36:15compared enron situation to also nasa's
36:18with the columbia uh shuttle
36:22loss
36:23where nasa had had phone strikes you
36:25know where
36:27chunks had fallen off
36:28hit the shuttle and it had provided you
36:30know it didn't cause any problems
36:32and so
36:33the one the the big foam strike that hit
36:36a vulnerable part of the left wing
36:39there was a nasa engineer very concerned
36:41about that but he got nowhere because
36:44there was just such a we're fine we're
36:45fine that's not going to be a big deal
36:47and he even predicted what was going to
36:49happen with that shuttle that you know
36:51if it really did what he thought it did
36:53it chunked off some of the heat shield
36:55upon re-entry
36:57that blasting heat was gonna
37:00bore a bigger hole they would lose all
37:02sensors from the left side of the
37:03shuttle and within seconds lose
37:06communication with the whole shuttle
37:08which is what happened um
37:10and with enron i think
37:13there were people that just
37:14you know we're enron we'll get the right
37:16lines of credit we'll get the right you
37:18know liquidity
37:20um you know
37:21kind of bully our way through it um the
37:24company wrote off those raptor
37:26structures
37:28or at least they announced that they had
37:30an earnings release statement
37:31mid-october
37:33and it was just not something you can do
37:35accounting wise it's kind of like
37:37robbing the bank and then when the
37:39police stop you you just say well here's
37:40the money i haven't used any of it yet
37:42you know here it is you know sorry you
37:44know you're still going to be arrested
37:46um it was just something you cannot do
37:49and so that kind of struck me that who
37:51in the world is advising ken lay what
37:53lawyers what accountants are sitting
37:55around
37:56telling him that this is the best
37:58best avenue i mean i thought he could
38:00form the crisis management team face
38:02face the music or keep the fraud going i
38:05never thought they would try to write it
38:07off as a current period non-recurring
38:09write-off which literally accounting
38:12wise is like trying to
38:14hand the stolen goods back to the police
38:16and saying it's all there yeah
38:20um i love that you bring in that issue
38:22of you know that hubris or something of
38:24uh yeah that might be a problem but i'm
38:26not gonna get into it and we're gonna be
38:28fine it's almost like
38:29to have a broad culture
38:32of ethical conduct there needs to be
38:34some humility that we are not
38:37above reproach this
38:39you know a scandal is not something that
38:41we are completely insulated from and
38:42that would never happen to us um i think
38:45that that's an interesting angle and
38:46something to
38:47try to impress upon the culture of don't
38:50assume that like the music's never gonna
38:52stop playing because you know it can
38:53happen to anybody yeah and
38:55life is fragile and everything's fragile
38:57and everything can fall apart so i mean
38:59enron's not even a going concern anymore
39:01irrespective of all the accolades they
39:03got and the golden boy of business and
39:05all those kinds of things it's not even
39:06around anymore it's it's a punch line at
39:08this point you know what i'm saying so
39:10everything arthur anderson's not around
39:11there you go
39:13there you go i mean uh yeah so i want to
39:16talk a little bit about
39:18what those what that next sort of
39:20chapter was like so you kind of sniff
39:22this thing out you
39:24get some good in intel some good
39:25insights you know part and as we talk
39:28about this i'd love to hear about some
39:29of the other things that you would have
39:30done differently because we're always in
39:32this sort of conflict and battle of like
39:33we want to give people a way to speak up
39:36to voice concerns
39:38you know we in our business we want to
39:39hear it all because reality is our
39:41friend and so forth there's some
39:42disconnect that happens as a company
39:44scales but as you're going through that
39:45that next chapter you talk to
39:47you talk to the chairman of the board
39:50things started moving and then at some
39:51point you have this label as a
39:53whistleblower on you i don't know how
39:55long that took but what was that next
39:57stage of
39:58of your journey like
40:00well so
40:01enron wrote off those raptor structures
40:03in an earnings call you know they
40:06they actually never filed their third
40:08quarter financial statements
40:10and the very next day the wall street
40:12journal had an expose article
40:15they had
40:16someone giving them information there's
40:18a whistleblower that was given the wall
40:19street journal some information
40:22and they hit enron with front page
40:24expose articles that wednesday thursday
40:27friday and by friday the sec was
40:29conducting an investigation
40:31enron really went radio silent they
40:33didn't explain themselves very well
40:36and the stock price just spiraled
40:38further down down down we went from like
40:41thirty three dollars a share to nine
40:42cents by the end of november wow lots of
40:45shareholder litigation filed
40:47you know problem
40:49after problem
40:51and i
40:52uh the company declared bankruptcy
40:55december first or second it was on a
40:57weekend and on december third on monday
41:01you know
41:02people are
41:03all you know pulled together for big
41:05floor meetings and their managers tell
41:07them hey
41:08last friday was your last paycheck go
41:10back to your desk clear out your
41:11personal items and go
41:13no severance pay no medical insurance
41:16and i phoned up the head of hr i i
41:19really had no real job
41:21so i've been working for andy fastdown
41:23on the 49th floor which was you know
41:26part of our executive suites
41:28and i was moved down to hr on the 16th
41:31floor
41:32no real assignments in this limbo period
41:35of of
41:37during the investigation quote unquote
41:40and um you know the head of hr said
41:42sharon if you didn't get a call over the
41:44weekend
41:45where you were asked to stay on to work
41:47for the bankruptcy estate you know
41:48you're you're gone too you know
41:52and i had been asked by an in-house
41:54lawyer to meet with the law firms that
41:57had been hired by enron
41:59in all these shareholder litigation so
42:01they had a law firm representing enron's
42:03board a law firm representing enron the
42:05corporation law firm representing enron
42:07executives
42:08and he had had me meeting with these
42:11lawyers now i understand that he had
42:14told them eventually
42:16you know the plaintiff is going to find
42:18sharon and find out what she's saying so
42:21this is kind of like what the opposing
42:23side is saying yeah you know can you
42:24understand it you know so i was kind of
42:27you know
42:28being used to
42:29help defend enron i guess but this
42:32in-house lawyer said don't leave the
42:34building you know let me see if i can
42:36get you one more month of employment
42:38because you know if you're if you're
42:40walking out the door you're going to be
42:41hunting for a job and i really would
42:43like for you to still continue meeting
42:45with some of these law firms so he saved
42:47my job that day for about a month
42:50and mid-january is when congress
42:54found all that material that i'd given
42:56ken lay in august
42:58in a box of subpoenaed documents there
43:01were about 11 congressional
43:02investigations that were looking into
43:05why you know a company the size of enron
43:08had never really reported a losing
43:10quarter and poof they go bankrupt and
43:13shareholders were holding stock worth 60
43:15billion at the beginning of 2001 you
43:18know so in in one year a company goes
43:20from being worth 60 billion to nothing
43:23you know what happened
43:24and enron had
43:26was
43:28not
43:29trying to
43:31hide information as much as drown
43:33congress was too much
43:35they said they just were receiving you
43:37know rooms full of boxes um and poor
43:41some poor congressional staffer was
43:44probably stuck in a basement you know
43:45just going through everything and when
43:47they found my memos
43:50they released it to the press they also
43:52did some very direct subpoenas like
43:55we're going to ask vincent and elkins
43:57the law firm what did you do around
43:59these allegations are there anderson
44:01what did you do around these allegations
44:03enron what did you do
44:05so it kind of opened up the discovery
44:08process almost
44:11and that's when i was subpoenaed to
44:12testify in front of congress
44:15did that feel like some vindication for
44:16you
44:18well it was
44:20that and the most vindication came about
44:23from something known as the powers
44:25report
44:26and when enron was totally falling apart
44:30our sleep of the switch
44:32board of directors finally
44:35hired an outside law firm an outside
44:37accounting firm to investigate my
44:39concerns and to look into a few other
44:41things
44:42and they added bill powers to the board
44:44and he was running this
44:46this investigation
44:48and bill powers was the dean of the
44:51school of law at university of texas at
44:54austin
44:55and so this report has his name on it
44:58it's known as the powers report and they
45:00filed it early february 2002
45:03and that really vindicated me it
45:05basically said everything i had claimed
45:07was true and there's even some more
45:09rotten stuff
45:11so that felt safer i i was no longer the
45:15one lone voice that was saying enron had
45:17committed fraud
45:20yeah i mean how different would your
45:21life have been if that staffer didn't go
45:23into that archive box
45:25have you thought about that before
45:27um
45:28well yeah it'd be very different you
45:30know because i i think i would have
45:32worked at enron maybe a month or two
45:34more and then i would have been part of
45:35that 5 000 trying to find
45:38you know
45:39a job
45:41yeah
45:42so you definitely took the scenic route
45:46yeah
45:47so um
45:49walking into congress what was that like
45:51i mean it's kind of this interesting
45:53dynamic that you were kind of a part of
45:55because
45:56you
45:57it's almost like uh the allegiance can
45:59differ between your country and your
46:01government and you know what i find is
46:03that whistleblowers to your point are
46:05some of the most loyal people they're
46:07some of the most conscientious people
46:08they're the most value driven people and
46:10they're really being super loyal to this
46:13idea that of what the company is or the
46:15idea of what the company is supposed to
46:16be as stated on its values page or on
46:18its mission or something and yet there's
46:20this um this sort of paradox where
46:23management is maybe pushing in a
46:24different direction due to their own
46:25self-interest or something where there's
46:27this sort of like
46:29uh and i think this is why a lot of uh
46:32whistleblowers get blackballed which i'd
46:33love to talk about a little bit but um
46:36there's this interesting sort of uh
46:39dissonance between like the source of
46:41the loyalty and sometimes you think
46:43you're working you know you're trying to
46:44be loyal to the company when actually
46:46someone has sort of taken advantage of
46:47you and i think we saw an example of
46:48that as you were kind of brought in to
46:50help kind of build the defense um when
46:52it became clear to you
46:54uh that okay hey you know
46:57there's kind of nothing to save you know
46:59there's no way to save the sinking
47:00titanic and then you're brought into
47:02congress what was that like walking in
47:04there and as you look down down the path
47:07where you're like okay i'm kind of in
47:08the grease now these guys pushed me in
47:10the grease what were those feelings like
47:12when you're like how do i get up out of
47:13this thing
47:14and kind of land back on my feet
47:17well it's interesting because they
47:19congress did subpoena
47:21ken lay
47:23um our risk management person richard
47:26bai rick causey our chief accounting
47:28officer andy bastow
47:30and
47:31they all played the fifth you know i you
47:34know they went there they held up their
47:36hand to tell the truth the whole truth
47:38and nothing but the truth but when asked
47:39questions
47:40you know they said i'm pleading the
47:42fifth fifth amendment jeff skilling did
47:45testify he was the only you know one of
47:47the only few executives but but a few
47:50others did too the lawyers testified
47:52jeff mcmahon testified
47:55and what i found in in watching and
47:58paying attention to their congressional
48:00testimony
48:01is they sure did they sure had trouble
48:03recalling a lot of things
48:06you know i just don't recall that or yes
48:08i know i wrote that down but you know
48:10that was four years ago or two years ago
48:13and for me
48:15when when i was called to testify you
48:18know you're sworn to tell the truth the
48:20whole truth and nothing but the truth
48:22and so i
48:24i kind of felt like i sure don't want to
48:26lie
48:27you know the truth that i know i'm
48:29supposed to tell the whole truth
48:30so
48:31it was a lot of testimony
48:34really pointing out where the problems
48:36were kind of helped mark the
48:37prosecutional trail
48:39on where enron had problems and
48:42at that point
48:43you know enron was already bankrupt
48:45you're really wanting the truth to come
48:47out so
48:48the guilty people might be held to
48:50account but that there might be some
48:52lessons learned from it right yeah
48:54that's a good point
48:56um
48:56i want to kind of dive into the label
48:59and you know
49:01you know very few whistleblowers that
49:03we've spoken to would say i wouldn't do
49:05it again because they're just those
49:06kinds of people
49:07um
49:08but
49:09how difficult was your life after you
49:12stood on your principles and how long
49:14did it take for whatever negative
49:17uh label or whatever
49:19that was attached to you for
49:21oddly paradoxically doing the right
49:23thing to kind of fall off you know what
49:25i mean
49:27um that's a great question i am
49:31i mean it
49:33i'm the only whistleblower that has a
49:34great story
49:36you know all that congressional
49:37testimony
49:39um you know time put us on their cover
49:42i i had immediate speaking requests you
49:46know all over the country and you know
49:48i've been to some fantastic places
49:50around the globe talking about
49:51leadership and ethics so i have a very
49:54good story
49:56you know able to make a living on the
49:57lecture circuit but as i sought out
50:00corporate employment those doors would
50:02be shut and even
50:04i used to live two blocks from rice
50:05university and looked at participating
50:08in some of their executive sessions and
50:09their executive training and it looked
50:12like it was a big wide open door of
50:14opportunity
50:16um until it until that door was slammed
50:18shut
50:19so i think it's taken almost 20 years
50:22for the full troublemaker aspect of it
50:25to wash off i mean as i mentioned i'm
50:28i'm now the executive in resident
50:30residence at texas state university
50:32first full-time job in 20 years
50:36so that's a long time
50:38you know for that label to be to be
50:40washed off
50:42do you think that was a function of the
50:44time do you think that was the function
50:46of the era that we were in or do you
50:48feel like if you know hey dodd-frank's
50:50in place now if you were kind of
50:53you know if it was happening now do you
50:55feel like the world is sort of more
50:58um
50:59i don't know
51:00like responsive to this like or do you
51:02still think like if that happened today
51:03it would be 2042 before that label fell
51:06off you know you know what i'm asking
51:07here
51:08yes i do um well the beauty of
51:10dodd-frank is
51:12it does allow a would-be whistleblower
51:15to contact a lawyer and remain anonymous
51:18and the sec really works with that
51:20lawyer to try to make sure that their
51:22investigation and their inquiries
51:24within the company don't pinpoint who
51:27likely you know told them about the
51:29problems
51:30so it would be great they get a reward
51:32and they can hopefully stay employed at
51:34their company and their company starts
51:35doing the right thing
51:37but to me it's always been kind of hard
51:39to understand why
51:42but i spoke at a conference in 2003 at
51:45the aspen institute and i met
51:47bob monk
51:48and he and nell minnow
51:50started institutional shareholder
51:52services they're in this kind of
51:54corporate governance leadership space
51:57and this was a reception cocktail
51:59conversation but he said you know you
52:01and cynthia cooper you know she's from
52:03worldcom you guys will never work in
52:06corporate
52:06america again
52:08and i'm like what you know particularly
52:10cynthia cooper who was head of internal
52:12audit and did everything the right way
52:14you know what do you mean we're not
52:15going to work in
52:16in corporate america again
52:19and she said he said eh
52:21people just see you walking down the
52:23hall
52:24and you make them feel bad
52:26you know something deep down in their
52:28subconscious says
52:30they
52:31probably wouldn't have had the courage
52:32to speak up like you did so you just
52:35make them feel bad and they can find
52:36that skill set somewhere else wow you
52:39know
52:40and so maybe that's it but maybe that's
52:42it
52:44yeah i don't know like i it really
52:46it doesn't make sense to me that you
52:48know there's some psychology there of
52:50like i feel guilty i'm not as righteous
52:52as you you know uh hey you know let's
52:54get somewhere let's get someone else i
52:56kind of feel weird
52:58maybe that explains it you know i think
52:59a lot of people in our market you know
53:01people who are ethics experts compliance
53:03leaders who work in governance and audit
53:04and all of that you know i i think they
53:07see this the right way and they see hey
53:08you know what i'm not going to have
53:10a go ahead i completely agree with that
53:11i mean i think people that are in this
53:13space yeah
53:14would love to have me love to have
53:16cynthia cooper and i also think 90 of
53:19the people within an organization
53:21are very would be very excited okay
53:25but it's that just that one person in
53:27leadership yeah that just mixes it
53:30you know it's just that one or two
53:32person person in the organization that's
53:34near the top
53:36that just says
53:38do we really know what their motivations
53:40were you know can we get this skill set
53:42elsewhere there's just too much baggage
53:45here
53:46i think most of the people in the
53:47organization would be happy to have us
53:49it's just that one or two
53:51and they happen to be powerful enough to
53:53squash it yeah i think that's an
53:55interesting perspective because i think
53:56a lot of people in our space who are
53:59ethics experts say hey you know what i'd
54:01love that and if it's so hard for
54:03whistleblowers to get hired i guess
54:05everyone else is against us and we're
54:07just kind of way on the other side of
54:09this line of integrity and i think you
54:11illustrate it well sharon that you know
54:12there are a bunch of people who would be
54:14for it but there's some politics and
54:16there's some power structures and you
54:18know there's some of that old boys club
54:20of hey you know what let's just not mess
54:22with this
54:23which is really unfortunate and maybe
54:24it's changing and maybe the culture is
54:26changing but it you know i think part of
54:29the challenge with this whole
54:30whistleblower conversation and you know
54:32that really the travesty that you
54:34haven't had a full-time job for the past
54:3620 years because of this is
54:38it there's this tyranny of the minority
54:40that it does not have to be a majority
54:42decision to not employ a whistleblower
54:45one or two or a handful of people can
54:47scuttle that whole thing and then it's
54:49like all right start the recruiting
54:50process over again right
54:53yeah exactly and you know uh as an
54:55executive i think i can say this but
54:57there's an oversampling of sociopaths at
54:59the executive level so
55:00[Laughter]
55:03so the odds of someone being like put
55:05off by somebody who's quote unquote more
55:07righteous is just gonna be higher and
55:08again there's more power concentrated
55:10there um it's just this bizarre paradox
55:12because some of our best teammates are
55:14people that have been whistleblowers in
55:16other places and we're definitely
55:18uh proponents of you know hiring
55:21whistleblowers and trying to like erase
55:23this stigma because
55:24i don't know it's you know
55:26you know i guess
55:27unless you're trying to hide stuff you
55:29don't want these people around or
55:30something you know yeah i mean i think
55:32that that's the natural assumption is
55:33like oh well i guess if i can't get
55:35hired here they must be trying to hide
55:36something they must be unethical um or i
55:39just imagine that some people you know
55:40i've wondered that myself like how can
55:42nobody want sharon watkins to work work
55:44for you you know she's gonna be honest
55:46you know she's gonna stand up for the
55:47right thing you know you know it's not
55:49gonna be a fox watching the hen house um
55:51but i've wondered that same thing like
55:52okay well do they have something to hide
55:54or you know they just you know don't
55:55want to get in the fray but i think that
55:58dynamic of it can just be a couple
55:59people who are uncomfortable or someone
56:01who you know casts you know some vague
56:03aspersions on your character and says ah
56:06well maybe you know you know maybe she's
56:08just bitter and she wanted to take him
56:09down or something like that um it
56:11doesn't take a lot to kind of mess this
56:12up yeah that's a good point
56:14yes yeah well this has been a really fun
56:17conversation um i don't know i've uh
56:19like i said i saw you when you were
56:22testifying to congress and i was like
56:23wow this is freaking amazing look at the
56:25courage that this person um is
56:27exhibiting and again you're kind of jump
56:29you kind of jump off the cliff and you
56:30don't know you don't know where you're
56:32going to land you don't know how long
56:33this label you know how you don't you
56:36don't know the implications of it is is
56:38is my point so
56:39it's great to talk to you it's great to
56:41pick your brain i feel like we could
56:43this could be like a three-hour episode
56:45but it's been a lot of fun to hear your
56:47insights um as we part ways i have two
56:51questions for you one is if you go back
56:53in time to sharon
56:55before you know we talked about it a
56:57little bit but go back before that um
57:00you know to a young sharon who's maybe
57:01just coming out of undergrad or
57:02something what advice would you give
57:04yourself and then separately what advice
57:06would you give somebody who's witnessing
57:08some kind of malfeasance in their
57:09company but is a little bit scared to
57:11speak up and speak out
57:13about it
57:14okay great questions
57:16um well i do tell college students
57:20um you know see why people are excited
57:22to work at an organization you know what
57:25does the ceo say you know you're really
57:27looking for leadership
57:29that
57:30that really loves the products and
57:32services that they're producing you know
57:35that they're really
57:36um what they talk about you know is
57:39their employees their customers their
57:41products i mean you can think about
57:42steve jobs you know he was always
57:44talking about
57:46you know the
57:47ipod music or the latest mac
57:50um it was always about the products and
57:53jeff skilling was always talking about
57:55our stock price
57:56and
57:57i think also if people were to say oh
58:00why do you work here you know you're
58:01interviewing for a job at enron
58:03you know why do you work here well at
58:05enron international
58:07people would say you know it's very very
58:10inspiring and kind of fulfilling to go
58:12into a developing country that lacks
58:15reliable electricity and help
58:18you know build electric plants you know
58:20where people now have you know water
58:22wells that run or
58:24comfort the creature comforts that we
58:26just take for granted yeah
58:28and if you ask some of the traders or
58:30some of the people that were in the in
58:32the areas under jeff skilling you'd hear
58:35more about you're you're going to make
58:37more money here than you ever thought
58:38you'd make you know it's all about what
58:40what you were going to be taking home
58:42um so the wrong motivations and you know
58:45so you're really
58:46what motivates you to work here is a
58:48great question when you're interviewing
58:50you know
58:51at companies you know what what
58:54what makes the makes them excited to
58:56come to work and if it's all about stock
58:58price and personal compensation
59:00wrong place yeah
59:03but in in terms of
59:06you know one thing i want to point out
59:07for people who find wrongdoing
59:10um
59:10i just love this reward program that's
59:14part of dodd-frank with the sec's office
59:17of the whistleblower because
59:19really 10 to 30 percent of sec fines now
59:22go towards whistleblowers and that has
59:25attracted legal talent to the cause of
59:28the whistleblower so someone runs across
59:30a problem they can actually you know
59:33just google whistleblower legal
59:35and they'll find some law firms that can
59:38give them some great advice help steer
59:41the course you know help map a plan for
59:43them and sometimes maybe they haven't
59:45found something wrong and they'll be
59:47able to bounce ideas up from off this
59:49these lawyers to determine okay maybe i
59:51haven't found anything
59:53but the beauty of it too is
59:55you know i i first stumbled across
59:58very aggressive accounting at enron in
1:00:00late 96 and
1:00:02what
1:00:03what enron adopted as fair value
1:00:05accounting in 96
1:00:07was really the seeds of the later fraud
1:00:10and i did speak to some arthur anderson
1:00:13colleagues i got in trouble i spoke
1:00:15internally that i was against this you
1:00:17know i would have contacted a lawyer
1:00:19they would have contacted the sec the
1:00:21sec would have come in
1:00:23slapped iran on the wrist you know fined
1:00:26him enron would have stayed on a
1:00:27straight or straight and narrow path
1:00:30and i want to point out that i wouldn't
1:00:32be thinking wow i saved enron from
1:00:34bankruptcy and the sec wouldn't be
1:00:37thinking we saved shareholders from
1:00:39losing 60 billion dollars right you know
1:00:42so we need to be respectful that the
1:00:44small things that get stopped
1:00:46are really perhaps preventing a huge
1:00:48problem
1:00:49and i think that's one of the main
1:00:50problems with ethics compliance risk
1:00:53management departments they don't get
1:00:55credit for the huge problems they've
1:00:57prevented
1:00:58that's great sharon i'm so glad you
1:01:00brought that up because
1:01:01that concept that it's hard to value or
1:01:04you just can't value the thing that you
1:01:06prevented
1:01:08is really a big struggle that i think we
1:01:09have in ethics departments and in this
1:01:12profession of we're doing great work all
1:01:14the time right we're you know we're
1:01:16preventing fires we're you know
1:01:19there's
1:01:20there's a lot that we've discussed on
1:01:21the show about the cost that you bore as
1:01:23a whistleblower but the cost of this
1:01:26fraud
1:01:27you know what was it 5 000 people having
1:01:29to go look for new jobs moving their
1:01:30families around not making income you
1:01:32know all of the shareholder loss there
1:01:35that's the real thing that you know
1:01:36we're working all the time to prevent
1:01:38and it's so hard to
1:01:40to to really say hey you know what if i
1:01:42hadn't done this then three years from
1:01:44now there would be a 50 million dollar
1:01:45fine but we have to get into a place
1:01:47where we can
1:01:49advocate to our board our leadership to
1:01:51our finance departments around this is
1:01:53important and this is what's going to
1:01:55keep us from um that big problem down
1:01:57the line right and just as we wrap up
1:01:59sharon i appreciate you bringing up that
1:02:02that difficulty in valuing what you
1:02:04prevent um and i just i just want to say
1:02:06that for all the costs that you've borne
1:02:08for all of the time that you've spent
1:02:10not on your normal career path you know
1:02:13kind of dealing with all of the
1:02:14challenges the
1:02:15challenges that come
1:02:16you've been an inspiration to me i know
1:02:18that when i saw this happening i was
1:02:19like wow i can't imagine what that would
1:02:21be like to go up against that goliath
1:02:23and say hey you know what this is the
1:02:25right thing and i'm going to say the
1:02:26right thing you know and deal with the
1:02:29consequences i think a lot of times we
1:02:31talk about how you know whistleblowers
1:02:33you know have this reputation and you
1:02:35know you know how should we deal with it
1:02:37there are a lot of people and you know
1:02:38it may not be the ceos of all the
1:02:40companies there are a lot of people that
1:02:41see what you did and said you know what
1:02:43i want to be like that and i want to be
1:02:45someone who stands for what's right and
1:02:47i you know i just i really appreciate
1:02:49you
1:02:50modeling and living out those values so
1:02:51the rest of us can see hey you know what
1:02:53it can be done
1:02:54well thank you thank you that's very
1:02:57kind words warms my heart i appreciate
1:02:59it
1:03:00um where can people find you um where
1:03:03can they find your book where can they
1:03:05sneak where where are you giving classes
1:03:07where can we sneak in
1:03:09and yeah
1:03:10lecture here
1:03:12well i am i am going to be doing some
1:03:15obviously i'm full time at texas state
1:03:17and san marcos texas but i do teach a
1:03:20weekend course at unc up the road from
1:03:22you guys
1:03:24i did it last february and i'll be doing
1:03:26it this coming february those that's for
1:03:29mba students that
1:03:31uh keenan flagler there at ufc awesome
1:03:34very cool
1:03:35and so i'm
1:03:36you know i think these podcast
1:03:38opportunities are wonderful as well
1:03:40so i i'm um i i like the idea of getting
1:03:44getting the word out about what you know
1:03:46to would be whistleblowers
1:03:48yeah there's so much magic that can come
1:03:50from digesting the fact that reality is
1:03:52our friend and empowering people and
1:03:54giving them a voice to be these human
1:03:55censors in our organization only then
1:03:58can we truly start to crowdsource risk
1:03:59management this is not a game of
1:04:00sweeping more dirt underneath a rug and
1:04:02hoping that you know it doesn't feel too
1:04:04lumpy as we're walking across it it's
1:04:05about having a clean floor you know what
1:04:06i'm saying so yes exactly so anyways uh
1:04:10until next time thank you guys for
1:04:11joining us

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