Sherron Watkins was an Enron executive who tried to warn Chief Executive Officer Ken Lay the company’s books were being manipulated. Watkins said her concerns were initially dismissed.
“My biggest disappointment is that I was really not believed,” Watkins said.
In 2001, Watkins says she felt like the Greek parable of Cassandra; cursed with knowing the future but no one believing her prophecies.
“No one believed me in the Fall of 2001,” she said. “They just acted as if this was a minor hiccup in the road and could be handled with some good PR.”
Watkins said she remembers the meeting she had with Enron founder Ken Lay.
She discovered Enron’s accounting manipulations were hiding massive debt while overinflating how much money the company was actually making.
“I did come armed with a lot of memos, evidence, Excel spreadsheets, PowerPoints,” she said.
Watkins added that she also remembers thinking Lay was taking her seriously, then he asked her whether she thought Chief Financial Officer Andrew Fastow was doing a good job.
“I was just dumbfounded, you know? I’ve just sat here and told [him] how the Chief Accounting Officer and Chief Financial Officer have cooked the books; you can’t then conclude they’re doing a good job,” Watkins said. “It’s the most bizarre question I’ve ever received, and it’s still hard for me to wrap my head around why that question came out of his mouth.”
Watkins, believing at the time Lay was unaware of the unethical practices, would save the company he founded by cracking down on bad apples and making an honest admission to investors.
“I shouldn’t have gone by myself,” she said. “I should have gotten more people to go with me because Ken Lay dismissed me as one lone voice, one lone opinion.”
Lay died in 2006, shortly after he was found guilty of several counts of securities and wire fraud and making false statements. A judge vacated those convictions since Lay died before he was sentenced.
Watkins said as she was beginning to feel the sting of being a whistleblower, Enron collapsed.
The company filed for bankruptcy on Dec. 2, 2001. Federal investigators and Congress then found the work Watkins presented to Lay.
Watkins became one of the main witnesses in an investigation that led to dozens of convictions and massive changes in how corporations are allowed to do business.
“I can’t believe it,” she said. “Feels like yesterday, but two decades is a long time.”
In 2002, Watkins was named one of Time Magazine’s Persons of the Year and she co-authored the book, ‘Power Failure: The Inside Story of the Collapse of Enron.’
There was also a cost. Watkins said she lost friendships and the trajectory of her career was forever altered.
“They view me as the person that blew everything up when I’m not the one that cooked the books or allowed the books to be cooked,” she said.
Watkins still considers herself lucky. She said speaking engagements allowed her “to pay the bills” while spending more time with her daughter than a career as a corporate executive would have allowed.
Watkins now teaches Business Ethics at Texas State University and Corporate Governance and Leadership at North Carolina University.
“Enron comes up quite often,” she said.
Over the past two decades, Watkins has also traveled the world speaking out on corporate malfeasance.
“The reality is frauds start small, so to stop them at their very inception is wonderful,” Watkins said.