Corporate greed, arrogance and dishonesty brought down energy giant Enron, according to former Enron VP Sherron Watkins, the inaugural speaker in Heidelberg’s Patricia Adams Lecture series, launched Sept. 17.
It took Enron Corp. 10 years to build its assets from $10 billion to $65 billion, and a mere 24 days for it to collapse, according to Watkins, generally credited as the whistleblower who alerted Enron’s top executives about accounting irregularities that eventually led to the company’s demise.
Before her discovery, Watkins said Enron -- with its fast-paced, innovative culture and seemingly endless resources at employees’ disposal -- was the company to work for. Eight years into her employment with the company in a variety of executive leadership positions, Watkins stumbled onto fraud.
“I thought I was staying away from it, but I really wasn’t,” she told about 300 people gathered in Seiberling Gymnasium.
Many of Watkins’ former Enron co-workers were convicted of white collar crimes associated with the fraud, and are imprisoned or have served time. “There was just so much pressure to achieve results, and at Enron, the results were earnings,” she said.
Sadly, many of those convicted don’t believe they did anything wrong. Instead, they were lured by skyrocketing stock options. Watkins admitted that she, too, nearly got caught on the inside of the scandal.
At the time, “I should have left the company, but my own ego got in the way,” she said, adding that she was asked to “dummy documents” and perform other ill-advised tasks. “But in Houston, you just did not leave Enron.”
Instead, she transferred to Enron International, traveled the world and was “blissfully unaware” of any wrongdoing. In the summer of 2001, she was scrambling to find another position within Enron and took a commercial support position. It was in that role that she began to uncover the rapidly unraveling accounting scandal. Months later, after Enron execs dismissed her concerns, the company collapsed, resulting in 24 shareholder investigations and 13 Congressional investigations into their actions.
“My warning was too little, too late,” Watkins said. “The real rot at Enron started in ’96 when I first started to see problems.” They seemed to start small, but “poison was already injected into the system.”
The poison, she contended, started at the top with then-CEO Kenneth Lay. Enron was wrought with leaders who lacked a moral compass and were driven by greed, laying off 6,000 workers before Christmas and then paying themselves “gargantuan retainers and bonuses.”
“There was a sense of entitlement that was very pervasive,” she said.
Watkins, who spent time with students during several sessions of the second Heidelberg Business Conference, had words of caution for those entering the workforce. “Pay attention to the small things. They are a window into the soul” of a potential employer.
“Don’t be afraid to speak the truth. The real tragedy is when people stay silent.” And, don’t allow big bucks to lure you into overlooking wrongs.
Students entering the workforce should pay attention to the tone set by an employer’s CEO, and associate with those who demonstrate pristine ethics and values, and who love the organization. “I used to think the person at the top didn’t matter, but now, I believe the complete opposite. The one person at the top makes all the difference,” Watkins said.