One of my posts was used to describe Sherron Watkins in a book about identity. Yes, I am taking over the whole world, spreading my message that Sherron Watkins is a fake faker fakey fake fake.
One of my posts was used to describe Sherron Watkins in a book about identity. Yes, I am taking over the whole world, spreading my message that Sherron Watkins is a fake faker fakey fake fake.
One of Sherron Watkins bosses called me to give me some insight. He had a few complimentary things to say about her – that she was a good speaker, and “she can write a great memo.” He said that her problem was that she was very binary. As an accountant, she was very facile with numbers, but didn’t have the sophistication to see how the numbers fit into the overall project, or see how it all fit together to make a deal.
I’d had conversations with this person before about his venture into our justice system. He described a fine line between illegality and aggressiveness at Enron. He said there were things that people did without knowing it was against the law. I offered my own example: I commit honest services fraud every day of my life. If someone wanted to prosecute me for it, I would no doubt be found guilty. I’ve stayed on the phone with friends for an entire afternoon; I’ve bought plane tickets; I’ve done banking; I’ve worked on my novels – all depriving my employer of my honest services. I’m sure you could get me for a thousand counts easily, if you were so inclined. But while I was pulling up my accounts online or nursing a friend through boyfriend trouble over the phone, I never once thought, “Hey, I’m committing a serious felony. I should probably stop it.” Who thinks like that?
Those who are actually guilty of committing crimes at Enron likely experienced the same ignorance about the consequences of their actions. The person I was speaking with on the phone said that he recognized it could have been that way for Sherron Watkins and her insider trading crimes. She might have just not really stopped to think and be very clear about what she was doing.
As he spoke, I was awestruck by the grace and gentleness that this man offered. Nobody had offered him the same kindness. Nobody rushed to his defense (least of all Sherron Watkins).
And yet he was able to be gentle, to see her actions in the best possible light.
Whereas I wanted to rant and talk about how fat she’s gotten, his piercing brilliance cut through that, to the deeper issues of her own personal integrity. Make no mistake: he is not her biggest fan. But he also felt that to leave it on that gossipy “she looks awful” level was a mistake, and he had the fortitude and the inherent sweetness to go deeper.
He did note that she was not in a position to know the things she claimed to know. She was, he said, “deep in the bowels of the organization.” One of 180 Vice Presidents, she was not in any way a leader or an executive. She had been a VP for a long time and it was unlikely she would ever rise from that position. She was very aggressive and ambitious though, and he felt that when she met with Ken Lay regarding her memo, she was certainly attempting to leverage it for her own advantage. My addition to that is that it makes perfect sense: if she can’t advance organically, through her own efforts, it makes sense she’d try to do it some other way.
Listening to him talk, I was agog with his ability to see 360 degrees. He not only sees the immediate issue, but he sees all the dependencies beneath it; I admire his intellect, but also his heart. With his knowledge of her, he certainly has the ability to look upon Sherron Watkins with scorn and derision. But he doesn’t. He is excessively fair-minded about her (and probably all things).
It is kind of awe-inspiring when you meet a person who really tries to see the person inside. It makes you feel like trying to be a nicer person yourself.
And I will.
But not to Sherron Watkins.
Two more funny/sickening Enron links today that will no doubt curdle your stomach:
Lasting Fame For Her Role (Sherron Watkins; I just can’t bring myself to write any more about her today so unless she spontaneously combusts or learns to levitate, I’m imposing a 24-hour moratorium on her.)
Occupy Wall Street is looking for some former Enron employees. So you can show it to the man, I guess.
WSJ has a report on Enron today, and a picture of Sherron Watkins.
Just last week I wondered why they never post new pictures of her. Now we know:
Here’s the WSJ article in full:
The beginning of the end for Enron Corp. came exactly a decade ago. Yet the energy giant’s colossal collapse casts a long shadow over the government’s efforts to punish wrongdoing during the financial crisis.
In October 2001, the highflying Houston company jolted investors with a big loss. Less than two months later, Enron was bankrupt, and the scandal led to 42 civil enforcement actions by securities regulators and criminal charges against 33 people and the company’s auditor, according to a tally by law firm Davis Polk & Wardwell LLP.
More than a dozen people pleaded guilty. Former Enron President Jeffrey Skilling, now 57 years old, is serving a 24-year sentence in a Colorado federal prison following his 2006 fraud conviction.
Some people who helped untangle the Enron mess say the results show how regulators and prosecutors are coming up short as they work on cases tied to the financial crisis. So far, no high-profile executive has been sent to prison for crisis-related wrongdoing.
“There simply has not been the all-out, focused effort the Justice Department mounted to address the savings-and-loan crisis and corporate-fraud epidemic led by Enron, WorldCom and the hundreds of cases that followed,” said Chris Swecker, a former Federal Bureau of Investigation assistant director who now runs a security-consulting firm in Charlotte, N.C.
Phil Angelides, chairman of the Financial Crisis Inquiry Commission, created by Congress to investigate the financial crisis, complains that the “lessons of the scandals of the early 2000s were quickly unlearned.”
A Justice Department spokeswoman says it is unfair to compare Enron to companies snared by the crisis. “Our response to the recent financial crisis has involved aggressive, thorough investigations—on Wall Street and throughout the country—and we will continue to pursue criminal conduct wherever we find it,” the spokeswoman said.
The agency has “held hundreds of people criminally responsible for their conduct during the financial crisis,” she added.
John Hueston, the lead prosecutor at the trial of Mr. Skilling and former Enron Chairman Kenneth Lay, says no one should be surprised that it is taking a long time for federal prosecutors to piece together headline-grabbing criminal cases.
“We dug deep to show the underlying lies and self-dealing, working from the bottom up,” said Mr. Hueston, now a partner at law firm Irell & Manella LLP. “What we found with Enron, and I’m not sure the lesson’s been learned with this crisis, is there are no easy shortcuts in developing cases involving complex financial circumstances.”
Mr. Lay was convicted but soon after died of a heart attack. His conviction was vacated.
Just seven of the 13 people who went on trial over Enron were convicted, and four of the convictions were reversed on appeal, according to Davis Polk.
As a result, the government’s overall results are “mixed,” said Linda Thomsen, a former SEC enforcement chief who now is a Davis Polk partner.
In March, former Enron executive Rex Shelby pleaded guilty to one count of insider trading related to alleged exaggeration about Enron’s telecommunications unit in 2000.
Mr. Shelby, indicted in 2003, was sentenced to two years of probation.
“His life was put on hold for eight years,” said Ed Tomko, Mr. Shelby’s lawyer.
Some dude once said that love is a many funny things
I know there’s a perfect girl out there for me, cuz I see her
In my dreams
Dream girl, you’re a fantasy,
you’re the only one
Out there for me
Dream girl you amaze me all dressed in paisley
Love how not one but both eyes are lazy
When I first saw you you were drivin’ the bus
Thick skin, strong nose like a rhinoceros
Dream girl so beautiful, lips all crumby
Skin like asphalt, nose so runny
Thick thighs, no waist, not a care in the world
You not crazy girl, you just my baby girl
Yo, you’re a vision in sweats with the neon pouch
Half eaten squirrel hangin’ outta your mouth
Rainbow poncho, the female tonto
Hear a loud noise start bucking like a bronco
Dream girl, you’re a fantasy
you’re the only one
Out there for me
You got your cellphone ring set to Sex and the City
You’re like a hot bowl of grits only way more gritty
Straight drippin’ in turquoise, my Santa Fe queen
One short leg you got the Santa Fe lean
It’s music to my ears when you scream in your sleep
And when you lift your skirt in public yo I can’t help but peep
You’re like Cleopatra with the eyes of a pig
Love to watch you in the backyard when you go out to dig
Girl how’d you get those mouse traps glued to your neck
Little rascal, how’d you get screwed to the deck
You put away slurpees like a trash can
Your smiles all stainy and your not too brainy and
I like that!
Talking to your shoe like it’s your friend
I like that!
Yellin’ at the walls of make pretend
I like that!
Tellin’ you to stop it then you don’t
You say your gonna stab me in my sleep
But you won’t!
Last week thought I saw you on the street
Turns out it was a bag of trash
Just a big ol’ bag of trash
I thought you looked like a bag of trash
Dream girl I pitch a tent when you stomp in the room
Like a hellbound turkey mixed with a baboon
You’re sexy and you’re spicy like a bowl of Chex Mix
And I always feel safe when I’m in your flesh mitts
Your teeth so clean coulda swore you were British
Never take the Chex Mix cuz you always get skittish
Open clams with both feet cuz your ambidextrous
No point cuz we know you eat nothin’ but Chex Mix
Chex Mix number one food snack in the land
It’s the cereal taste that you eat with your hand
Chex Mix at your local grocer buy your box
Your family will all say
CHEX MIX ROCKS!
Chex Mix, your the snack for me
Your the only one
I’ll ever eat or buy
Chex Mix your delicious
You got 60% less fat than potato chips
Sherron Watkins has opened her yap again, this time to praise WikiLeaks. As I was reading, I was reminded of her testimony at the Skilling/Lay trial (and even somewhat in front of Congress) when she was lobbed softballs by the prosecution which gave her an opportunity to share her opinion on everything from the best diet soda to the role of the CEO.
For some crazy-ass reason, Ms. Watkins incorrectly believes that anyone gives a flying fuck what she thinks about anything.
She was an undistinguished VP who was generally disliked at Enron because she was crude, a know-it-all, and barely had a handle on her job. In the ten years since Enron collapsed, every single executive I know has moved on, made some money, reestablished himself in his career.
But not Watkins. Watkins prefers to bad mouth Enron for a career. How horrible it must be to wake up every day and talk about something you hate instead of something you love. But that’s all she has. As she has said herself, nobody will hire her (she seems shocked by this).
And frankly she isn’t very good at what she does. (Incidentally, I know this is petty of me, but have you seen a new picture of Sherron Watkins since 1999? I have not. Every magazine article, every web post, puts up a photo from her Enron days. She is – how you say – not mediagenic.)
Sherron Watkins, who tried to get her bosses to stop the fraud that brought down Enron Corp. a decade ago, thinks websites like WikiLeaks will strengthen the hand of future corporate whistle-blowers.
Oh, is that what she did? Because I seem to recall her asking to be cut into some fraud. And I also recall the certain matter of insider trading that was never addressed.
“I think the most important thing that will happen is some form of Wiki- Leaks,” said Watkins, a former Enron vice president whose efforts to shed light on Enron’s massive fraud led Time magazine to name her one of its “Persons of the Year” in 2002.
That is not a complete sentence or a complete thought. This is the kind of thinking her peers at Enron had to endure. Is it any surprise most people thought her a bit of a twat?
“I think we really have a changed situation,” Watkins said during a speech Tuesday to students at the University at Buffalo. “WikiLeaks changes that balance of power.”
Watkins said websites like Wiki- Leaks would help whistle-blowers by allowing them to post documents directly, rather than rely on their ability to persuade regulators and law enforcement officials to take action.
Sadly, Ms. Watkins didn’t have any documents to post online. Because even as she said herself, there was nothing in writing that would implicate Enron in wrong doing. So why is she talking again?
While Watkins praised the federal Justice Department for its prosecutions of executives at Enron and other major financial frauds from a decade ago, she had nothing positive to say about the Securities and Exchange Commission, which oversees the nation’s financial markets.
This is where her penchant for blabbing about herself comes into play. Ms. Watkins believes that she is the star of the movie. That we all can’t wait to hear what she says. She has this weird victimhood complex that has come out every time she opens her mouth; she complains about the media TO THE MEDIA. She talks about being hounded by cameras – AFTER SHE TALKS TO THEM. She thinks she’s Madonna being pursued by helicopters around NYC desperate for a shot for the cover of Us Weekly. And the reality is, this little fantasy is all she has. That’s it. Her whole life is now about convincing people that she’s important and the only way she can do that is by chasing cameras.
While the Dodd-Frank financial reform law created whistle-blower offices at both the SEC and the Commodity Futures Trading Commission, Watkins showed little faith in the ability of SEC regulators to follow through on the tips they receive.
“The SEC is nothing like the Department of Justice,” she said. “The SEC, they do not attract the right caliber of people.”
Another great opinion from Ms. Watkins. Thank goodness she said something, otherwise….?
Watkins stumbled upon evidence of Enron’s massive fraud in the summer of 2001 and alerted CEO Kenneth Lay about her findings. Lay ordered a probe by Enron’s law firm that, Watkins said, turned out to be a whitewash. Three days before his meeting with Watkins, Lay had received an email reply to a question asking whether he had legal grounds to fire an employee who reported accounting improprieties.
The way that last sentence is phrased should cue you into the fact that it isn’t true. Ken Lay asked V&E about his options – meaning whether to send her to Cindy Olson’s group or what. V&E replied that it would look bad if Lay fired her. Lay didn’t mention firing her; Lay had no intention of firing her. He took her stupid concerns seriously (his first mistake, in my opinion) and he protected her from Andy Fastow. He did everything in his power to handle the situation correctly. I’ve said it before and I’ll say it again, I believe that Sherron Watkins was attempting to blackmail Ken Lay.
By the end of the year, Enron had collapsed in the biggest financial fraud in the nation’s history.
Watkins said she wasn’t the only Enron employee who uncovered evidence of the energy company’s fraud. Many left Enron on their own; some spoke up to no avail.
“You feel like you’re being a loyal employee . . . and you get the equivalent of a smack in your back,” with threats that they could lose their jobs or be demoted, Watkins said.
If I stumbled onto fraud, I’d alert my employer and CALL THE FUCKING FBI. Jesus Mary and Joseph, it doesn’t take a genius to know you call for help if you uncover illegal activity. And this is just nonsense. Nobody was threatened – and imagine if you were. So what? Is that a crime too? If you’re working for a fraudulent company, get out! Go! Take a nice severance and say see ya. Nothing was keeping Watkins (or anyone else) at Enron if they believed that Enron was corrupt. Why would stay if you believed that? What was Watkins’ motive?
Still, Watkins told the students not to be afraid to speak up if they see something amiss. Even better, find others at the company who have seen the same things and speak up together.
“That was my biggest mistake, going to Ken Lay by myself,” said Watkins, who believes there were other Enron executives who shared her concerns.
Hahaha! She didn’t go to Ken herself. She tried to drag Jeff McMahon with her and he finally told her to go fuck herself (in nicer terms).
And if your pleas fall on deaf ears: “You’re better off leaving,” Watkins said. “Eventually, it’s like the tortoise and the hare: You will come out on top.”
Unlike she did.
For Watkins, her fame as an Enron whistle-blower came at the cost of her career. While Watkins now makes a living by giving speeches, she said other whistle-blowers have told her they haven’t been able to find work in their old fields.
“I’ll never work again in my chosen field,” Watkins said. “Whistle-blower equals ‘trouble maker.’ ”
I am so moved. Sniffle sniffle. So tragic. That fat, lying bitch who has dragged my friends and the man I love through the justice system, sending them to prison, separating them from their families and loved ones has no right to ever complain about anything again. She brought this on herself. And by the way, I don’t think it was the fact that she was a whistleblower that keeps people from hiring her, I think its the fact that she’s an admitted inside trader that probably has employers scared. Holy merlot, would you want this crazy beast working for you? Not in a million, bazillion years.
Sherron Watkins will speak at the University at Buffalo School of Management on ethics in accounting. Watkins will speak at 10:30 a.m. on Oct. 11 in the Center for Tomorrow on UB’s North Campus.
On Law.com, Ryan McConnell has written an article entitled “Three Things Enron Can Teach Us About Frank-Dodd.
Enron’s Code of Ethics in July 2000 was 61 pages long; it addressed a wide range of topics, from the insider trading laws to the FCPA. Enron’s code also addressed whistleblowers—two years before Sarbanes-Oxley’s prohibition against whistleblower retaliation and the requirement that public companies’ audit committees establish mechanisms for whistleblowers to report potential misconduct. In the last few pages, Enron’s code notes that “[Enron] will not condone any form of retribution upon any employee who uses the reporting system in good faith to report suspected wrongdoers, unless the individual reporting is one of the violators. [Enron] will not tolerate any harassment or intimidation of any employee using the reporting system.”
But Enron failed to follow its own code.
In August 2000, Enron’s Vice President for Corporate Development sent an anonymous letter to Enron’s CEO warning that the company would implode in a wave of accounting scandals. According to the legislative history of Sarbanes-Oxley, after this letter, Enron evaluated the risks associated with the whistleblower’s termination under Texas law. An independent report by William Powers later noted that in the weeks following the accounting allegations, Enron’s regular outside law firm conducted a cursory investigation and concluded that the optics of many of the Enron deals were bad, but that a comprehensive investigation by independent counsel or auditors was unwarranted. Instead of addressing the whistleblower’s concern, Enron violated its own Code of Ethics and failed to adequately investigate the accounting irregularities. The company filed for bankruptcy in December 2001.
Mr. McConnell, with all due respect, Enron did NOT violate its code of ethics. Ken Lay went out of his way to protect Ms. Watkins from Andy Fastow, putting her in Cindy Oslen’s HR department. He investigated her claims, regardless of the fact that they were absurd.
Regarding Vinson & Elkin’s report, though even they called the investigation “preliminary”, it wasn’t pro forma. They did in fact investigate:
- Interviews with V&E employees familiar with the transactions
- Interviews with Enron employees familiar with the transactions
- Reviewed Board Metting minutes, including Audit & Finance committee
- Reviewed public filings including 10-K and 8-Ks
- Reviewed deal approval sheets for LJM transactions
- Reviewed deal summaries for LJM transactions
- Reviewed various presentations and other documents
- Interviews with Enron personnel including: Andy Fastow, Richard Causey, Rick Buy, Greg Whalley, Jeff McMahon, Jordan Mintz, Mark Koenig, Paula Reiker, Rex Rogers, and Sherron Watkins herself.
- Interviews with Arthur Andersen auditors including David Duncan and Debra Cash.
- Second interviews with Andy Fastow, Rick Causey, David Duncan and Debra Cash.
All according to the “preliminary” investigation. What else would you have done? What did V&E overlook here?
Lesson Number One: Have a Strong Code Preventing Retaliation, and Follow the Code
Corporate compliance programs are not one size fits all—every program is different and must fit the specific needs of the company. But every program should have certain core elements to keep the company and its employees out of trouble. Enron’s Code of Ethics had many of the key elements, but the company ignored these principles.
I’m unsure what you mean here. How did it ignore its own principles? I’m genuinely curious what others think that the Enron leadership could have and should have done?
Companies must follow their code to have a robust compliance culture. A company’s commitment to a strong code and following the code encourages open communication and an environment where employees feel comfortable reporting potential compliance concerns to the company. Post-Dodd-Frank, at a minimum, a company’s code of conduct should encourage candid and open communication of potential violations of the code or other ethical issues and clearly state that employees have an obligation under the code to report misconduct to the company. And the code must make clear that retaliation against employees is forbidden.
Surprisingly, not every company in the Fortune 500 has language in the code of conduct addressing retaliation—16% of oil and gas companies, 27% of technology companies, 9% of chemical companies, and 10% of financial institutions do not address retaliation in their codes of conduct.
Failing to address retaliation and create a culture that encourages employees to come forward with violations of the code of conduct sends the wrong message to employees. Employees are more likely to first report issues internally if they know that the company has a strong compliance culture. When a company fails to follow its own code, however, employees lose confidence in the compliance program.
Lesson Number Two: Communication and Training Are Essential to Identifying Compliance Issues
Successful compliance programs, much like successful companies, foster a culture of open communication. Enron had a culture of secrecy.
This I gotta hear. How did they keep secrets? What are these mysterious the mysterious secret leadership was secretly keeping – secretly?
Sarbanes-Oxley and Dodd-Frank require that companies have an effective communication system for employees to report potential issues to the company. Reporting procedures must be tailored to address local laws in countries where anonymous reporting is restricted, such as France. Every employee must believe that internal reporting and compliance are valued within the company. Employees must understand that the company takes violations of the code of conduct or law seriously. Unlike Enron, companies must ensure that employees believe that they will not be penalized for voicing compliance concerns.
Who was penalized for voicing complains? Surely not Sherron Watkins. She was coddled and protected. So to whom are you referring here?
Ryan D. McConnell is a partner at Haynes and Boone LLP and former federal prosecutor. Katharine E. Southard is an associate at Haynes and Boone LLP.
Awesome. With a background like that, surely he can explain what the heck he’s talking about since his post was full of misdirection, obfuscation, and outright inaccuracy.
I had a great long phone call today with a friend who is a former Enron exec, and during our Enron-news gossip-fest, I learned that Mimi Schwartz and Sherron Watkins had a falling out. Mimi, who co-authored Sherron’s book (currently #622,786 on Amazon), decided that Sherron Watkins is crazy and now has nothing to do with her. Welcome to the club, Mimi!
Sherron Watkins gave another talk and this time, she accidentally blurted out a truth:
“No one intended to break the law, except maybe Andy Fastow who was our chief financial officer,” said Watkins. “Enron prided itself in being an innovative company. The problem with that is if you pushed your employees to innovate and make the company better, sometimes they are pushed into the dark side of innovation, which is fraud.”
I am not sure what she means by “pushing to the dark side of innovation”, but the first part of that paragraph is a rare truth uttered from her lips.
But then, of course, she immediately goes back to her nest of lies. The website states that:
According to Watkins, Fastow and Enron CEO Kenneth Lay sought to keep Enron’s stock prices up despite the company’s financial condition, which was in decline. Fastow worked with investment banks such as Merrill Lynch and Citibank to hide Enron’s losses and keep their stock prices high.
I don’t think Sherron Watkins is incredibly smart; she contradicts herself here, assuming the paper is quoting her accurately (which I am inclined to believe since her allegation is all that’s keeping the lights on at her house.) If Andy Fastow was the only one who meant to break the law, why is she including Ken Lay in this?
Ken Lay can no longer speak for himself. Sherron Watkins is a ghoul to continue to level increasingly bizarre allegations onto a dead man.
When Sherron Watkins wrote a memo to Ken Lay bringing up her concerns over the Raptors, Dr. Lay launched into action. He initiated an investigation inside the company and asked Vinson & Elkins to investigate as well. He genuinely wanted to know if there was something going on in his company that was unsavory and actually paid people to try to find some indication of fraud.
The result was less than breathtaking. V&E found nothing awry. This is the report V&E submitted to Enron after their investigation.
Sherron Watkins is expected to speak on Thursday at Canisius College. Her talk is about Leadership. I’ve called Canisius College to discuss Sherron’s views, considering she’s an admitted insider trader. I’ve been shuttled from one PR person to another, and am currently awaiting a call back from “Eileen” who, I believe, scheduled Ms. Watkins to speak.
I am not in the business of destroying people, not like Sherron is, not like many others are. I am only interested in hearing the College’s rationale for hiring an admitted insider trader, who never gave her ill gotten funds to charity or to the Enron victims fund. I am curious what the College thinks Ms. Watkins can tell young students just launching their careers. What can Sherron Watkins teach us about ethics and leadership? What can she tell us about ourselves?
If “Eileen” or anyone else eventually answers my questions, please be assured I will relay them here.
Good lord, when will this gorilla finally go away and live in quiet service of the Lord, as she’s so loudly proclaiming she wishes to do? Now she has surfaced to say that if Enron happened today, she would have gone to Wikileaks instead of the SEC. Big problem with that: she went to Ken Lay, not the SEC. And what documents would she have provided them? Enron was notoriously scant on the paperwork. I can just see Julien Assange trying to shift through financial statements, trying to find a scam in all that. Not bloody likely.
Sherron Watkins, the former vice president at Enron who tried to blow the whistle on the accounting violations at the scandal-plagued Houston energy-trading giant, told an audience at a seminar Friday on the new whistleblower provisions in the Dodd-Frank Act that she and other whistleblower employees would probably take their concerns to WikiLeaks rather than the Securities and Exchange Commission now.
“People now will go to WikiLeaks to protect themselves,” she said during a briefing at the New York State Society of CPAs’ Foundation for Accounting Education offices in Manhattan. “WikiLeaks is a huge, huge sledgehammer that many employees will go to. People like myself will just go to WikiLeaks.”
To protect themselves? This lady has forgotten her own actions. She was protected by Ken Lay. He took her out of Global Finance (Andy Fastow’s group) and put her in Cindy Olson’s group (HR). She wasn’t fired or threatened. In fact, her job was so secure that she took off to Mexico for a vacation. She returned two or three weeks later, refreshed and ready to get cracking in Human Resources.
Watkins, a CPA, said that since she came forward, she has been unable to get a job in corporate America despite her years of experience as an accountant and portfolio manager. “The label whistleblower is stuck on my head,” she said. She now makes her living by giving speeches, and said she has heard from other whistleblowers about their inability to get jobs in their old occupations.
Here’s a newsflash: this is what happens to whistleblowers. Especially ones as irresponsible as Sherron Watkins. They destroy their careers. Would you hire her? Would you want her on your team? Hell no. Not in a million years. But here’s a more immediate point: she was not a whistleblower. She wrote that memo to Ken Lay saying there was a PR problem. And if there was fraud, she wanted in on it.
Nobody called her a whistleblower. She called herself a whistleblower. She thought it would give her a little exposure, maybe leverage that to a better paying job. She miscalculated.
The Dodd-Frank Wall Street Reform and Consumer Protection Act passed last year and made sweeping changes to the financial regulation structure at the SEC and other agencies. Among its provisions is the establishment of a whistleblower office at both the SEC and the Commodity Futures Trading Commission. However, the SEC whistleblower office has not yet received any funding, and the rules establishing it are still out for comment. With threats from Congressional Republicans to de-fund the financial regulatory reform effort, it may not ever get that funding.
God I hope the Republicans hold on this issue.
However, another of the panelists at the briefing, former SEC commissioner Paul Atkins, who later co-founded the consultancy Patomak Partners, said the whistleblower awards would be self-funding. Under the provisions of the Dodd-Frank Act, whistleblowers would be able to claim between 10 and 30 percent of the amount collected from companies, but the tip needs to lead to a successful enforcement action by the SEC and the monetary sanction needs to be at least $1 million.
And there’s your motive for frivolous whistleblower claims. How sick. How sick that a bitter employee can make the claim that his employer is corrupt and then, Sherron Watkins-like, collect on that corruption – even if it wasn’t corrupt. In this environment, it is frighteningly easy to launch a witch hunt in which nothing needs to be proved – only implied. Don’t understand SPEs? There’s corruption afoot! Don’t like the CFO? A ten minute call to the Whistleblower Office should be enough to get him fired. Yippee.
However, as Atkins pointed out, the SEC is already being inundated with whistleblower tips, particularly at the Office of Internet Fraud. “Tips aren’t the problem at the SEC,” said Atkins. The problem is having enough people to deal with them.
Francine McKenna, who writes the Re:The Auditors blog and moderated the panel, noted that she receives many tips on accounting problems just from her readers.
“Whistleblowing is just one tool in detecting and deterring fraud,” said another panelist, Marion E. Koenigs, deputy director in the Public Company Accounting Oversight Board’s Division of Enforcement and Investigations. She noted that about 15 percent of the tips received by the PCAOB are anonymous. The PCAOB shares tips internally with its Office of Research and Analysis and its Inspections division, as well as with the SEC and the IRS when the tips fall outside its jurisdiction.
The proposed rules for whistleblowers try to strike a balance between encouraging employees to first report the accounting fraud to the internal compliance departments at their companies and bringing them to the attention of regulators.
Employees have 90 days after first reporting the problem internally to bring it to the attention of the SEC. However, that could lead to employees facing retaliation during that critical time period.
Oh no! Poor employees, whatever shall they do? They mistrust their employer enough to report it to the SEC, yet expect it to continue to issue payroll checks every two weeks? What kind of fucked up Barney Frank thinking is that? To this day I can’t wrap my mind around this. If the company is corrupt, why not get off your lazy ass, polish your resume, and find another job?
Also, some employees are exempted from the whistleblower awards, including internal and external auditors and compliance staff. Some employees may decide it’s better to wait until the potential damages reach the $1 million threshold before reporting on the violations, the panelists noted, and that could make them liable for helping to cover up the fraud. Clearly many whistleblowers will want to consult with their attorneys before deciding what to do, and that could expose them to predatory class-action attorneys who will try to claim a large chunk of the whistleblower award.
Gosh, it sounds like whistleblowers just can’t win. Victimized by “predatory class action attorneys” (hello Bill Lerach), their own greedy employers, and the system itself, what are they to do? Probably sue more.
In the meantime, the whistleblower runs the risk of being fired or demoted. “Companies have a number of ways to oppress people so they sound paranoid or like a nut case” by the time they blow the whistle, Watkins noted.
Or, in Watkins case, perhaps she was just paranoid and a nut case.
She pointed out how the SEC treated whistleblower Harry Markopolos like a “nut case” despite credible efforts over eight years to draw their attention to Bernard Madoff’s Ponzi scheme.
She noted that her whistleblowing at Enron, which made her Time magazine’s 2002 Person of the Year along with fellow whistleblowers Colleen Rowley of the FBI and Cynthia Cooper of WorldCom, probably wouldn’t have qualified her for a whistleblower award from the SEC under the current proposed rules. She believes that given the risks, many employees who want to get their companies to stop committing fraud will prefer not to bring the problem to the attention of either their internal compliance departments or the SEC, but to leak the documents quietly to WikiLeaks so they can hold onto their jobs as well as their careers.
Well, what documents would she have leaked to Wikileaks? That’s the fun question that goes unanswered in Sherron’s rambling. Enron was not corrupt, and Enron had nothing to be ashamed of. Sherron Watkins, on the other hand, does.
Maybe I should leak to my blog some documents about her. Private ones. Ones that no jury ever saw. Hmmm. Maybe I should.
Sherron Watkins will be played by Kathy Bates. There’s an abrasive quality that is intrinsic in Kathy’s work that I think works to her advantage in this role.
Cindy Olson will be paid by Holly Hunter. Holly Hunter is an amazing, underrated actress (and also beautiful, incidentally) and I think she could play Cindy very well.
Catherine Zeta Jones would be perfect for Rebecca Carter Skilling. Catherine Zeta Jones usually plays to her obvious appeal, but if you’ve ever seen No Reservations, you see that she has a lot of depth that hasn’t often made it to the big screen. Catherine’s ability to be sexy and flirty and professional before the indictments will really contrast nicely with the stunned stoicism of the days after the indictment.
Paula Reiker should be played by Carrie Ann Moss. Carrie Ann Moss has played quiet roles, and there is something about her that suggests an unspoken, steely, feminine strength, which I think is vital for the role of Paula Reiker.