The Fall of Enron - Sherron Watkins — Transcript

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1. 0:00[Music]
2. 0:07I had worked at Enron for eight years by
3. 0:11the time you know the summer of 2001
4. 0:13rolled around and I stumbled across very
5. 0:17large accounting fraud at Enron in in a
6. 0:19very typical fashion I switched
7. 0:22positions so you know a fraud sort of
8. 0:25comes on slowly I mean how many of you
9. 0:28have heard this the saying that a frog
10. 0:30if you toss a frog in boiling water
11. 0:31he'll leap out to save himself but if
12. 0:34you put him in a cool pot of water and
13. 0:36slowly heat the water he doesn't quite
14. 0:40notice when it gets to be room
15. 0:42temperature or lukewarm but by time it's
16. 0:45really warm he's too lethargic to jump
17. 0:47out well I'm like the Frog thrown in the
18. 0:50boiling water I heard all the right
19. 0:52things from Kinley he was saying if
20. 0:53anyone's truly troubled you know come
21. 0:55come tell us about what's bothering you
22. 0:58so that day identified myself to human
23. 1:01resources and I was on his calendar for
24. 1:02the following Wednesday and I fully
25. 1:05expected you know that truth would win
26. 1:09out that he would just hire a law firm
27. 1:11he would investigate my concerns and he
28. 1:15would find out that sure enough we had
29. 1:16cooked our books and it was a
30. 1:17significant amount the amount for two
31. 1:19thousand was we masked five hundred
32. 1:22million dollars of losses and our income
33. 1:24that year was one billion so on a
34. 1:26pre-tax basis it was misstating our
35. 1:28earnings by over fifty percent well Ken
36. 1:31Lay you know did did not really look
37. 1:35into my concerns I ended up being
38. 1:36subpoenaed to talk to testify in front
39. 1:39of Congress in February of 2002 when
40. 1:41Enron had already collapsed into
41. 1:43bankruptcy and they showed me a memo
42. 1:45from Vinson & Elkins Enron's outside law
43. 1:47firm it was dated August 24th I had met
44. 1:50with Ken Lay on August 22nd and the memo
45. 1:53said per your request here are the
46. 1:56potential consequences of discharging
47. 1:57employees who raise accounting concerns
48. 2:00so his first reaction was to dump me on
49. 2:03the street put me in emergency job
50. 2:05search mode and that you know that would
51. 2:07have I was the primary breadwinner for
52. 2:09my family that that would have been very
53. 2:11horrible now they said that I didn't
54. 2:15really like Texas is a
55. 2:17employment-at-will state you know you
56. 2:19can fire for no car
57. 2:21but they did say there was some case law
58. 2:24how many lawyers are in the room or law
59. 2:26students yeah well of course there was
60. 2:29there was some case law that I might at
61. 2:33least be able to bring a wrongful
62. 2:34termination suit
63. 2:35I wouldn't prevail in court but the
64. 2:38structures the Raptors that I was
65. 2:40concerned with their cosmetics did not
66. 2:42look so good right now and it might not
67. 2:43be good for those things to be
68. 2:45discovered in in a trial setting so the
69. 2:48the advice was more like just you know
70. 2:52don't fire me you know and and that was
71. 2:57pretty much the way I was treated I used
72. 2:58to be on the 49th floor which was 49 or
73. 3:0150 where the executive floors I got put
74. 3:03down to 16 in a cruddy little office
75. 3:06with metal Renta furniture and you know
76. 3:08I was always snagging my suit on a desk
77. 3:10drawer that wouldn't close and you know
78. 3:12real work but you know really Enron
79. 3:14imploded too fast to get rid of me and
80. 3:179/11 happened smack in the middle of
81. 3:19that
82. 3:20so really the fall of 2001 was a very
83. 3:23very bleak time because you know 9/11
84. 3:26knocked us all off our our feet for a
85. 3:29while but it was alarming to me that I
86. 3:32didn't see the captain of the ship
87. 3:33sounding the alarm bells that Ken Lay
88. 3:36instead was you know I found out later
89. 3:38he just did this whitewash investigation
90. 3:40probably anticipating that the worst
91. 3:42that would happen is some shareholder
92. 3:44lawsuits my mistake was going in alone I
93. 3:47should have gotten more people to go
94. 3:49with me so he couldn't dismiss me as one
95. 3:51lone voice and then when he hired Vinson
96. 3:53& Elkins to look into my concerns that
97. 3:56was interrupts primary law firm I should
98. 3:58have realized that that that meant a
99. 4:01whitewash that meant you know not a real
100. 4:04investigation