she found in the company's financial statements, but late as it turned out was up to his neck in the scandal. 5 years later he was convicted on 10 counts of securities fraud, although he died of a heart attack before he could be imprisoned. sharon watkins for her part assumed a place in the pantheon of the most important whistle blowers in modern american history. she found evidence of illegality, and she reported it. she testified on capitol hill. she wrote a book about her experiences and she was named time magazines person of the year in 2002, along with 2 other whistle blowers sharing. watkins is now a highly sought after speaker on whistle blowing and business ethics. and we're happy to welcome her to the show sharing. it's good to have you. thanks for being with us. well, thank you john, and thank you for all the flattering comments. i think it's nice to be on your program. they're all true and thanks for joining us. there are so many things that i want to ask you about, but let's begin with the fundamentals. for those of our viewers who are not

familiar with your work, you are a senior executive at enron, one of the biggest energy commodities and services companies in the world. you found accounting irregularities, and you reported those regularities to then ceo kinley. tell us about that and about what happened next. well, i had it stumbled across these. this horrible accounting brought in the summer of 2001. and my 1st reaction was to desktop my resume and, and try to leave the company. because i do, bill is a it might be fruitless to speak to the ceo of the time jeff schema. but in august, mid august, he surprisingly clipped. he had been chief operating officer since 97 in 2001 he taken over a c, e o. the job wanted for decades for at least a decade. and 8 months later just quitting and for no good reason. and i really felt like it was, it was a chance to maybe write the ship. but can my,

with sherman of the board very was stepping back in a c, e o. and a, maybe i had the real reason just stealing was leaving the company was going to implode in a way of, of accounting scandal. and jacqueline the just needed to know that. wow, one of the things that i recall about the and ron scandal was that wall street loved the company right up until the point that it fell apart. and i remember that it fell apart very quickly. take us back to that. you knew that things were coming to a head. you tried to make corrections, and to bring the problems up your chain of command. at 1st, the outside world had no idea that any of this was happening. what was it like it and run when the news finally broke? it's the whole thing i'd like to use the titanic as an example. so, you know, i'm a crew member. i know we've had an iceberg. water scoring in that's kind of a cool let to my accounting knowledge that he just, it's very hard to recover from cooking yearbooks. and these were massive numbers.

it was a manipulation of a half of our knees in the year 2000. so this was a significant manipulation and so on like the crime member, one of the captives you expect, you know, the alarm bells going off of the life of lowering business lines being say toward cash. you know, what's the crisis management team and are planning on doing. and instead, people just ignore the problem or kind of focused on, hey, aren't really titanic we're, i'm suitable. let's just look back at our plans. so i sort of shouldn't be a problem for us. i'm maryland. chavez is a strong buy them in early october of, of 2001. and we can see december 2nd, we went fast. i mean, it is kind of similar to silicon valley bank. um, you know, when people get nervous that you're not going to be around there is sort of the run

on the bang. and that is what happened at enron as well. but more in our trading accounts, where we had large deposits or large really liabilities on the trading side. and those, those customers both gather accounts and requested their money. and that's kind of let slip put us in crisis. and we're talking about huge amounts of money here. i yeah, i was looking at the numbers last night just to sort of refresh my memory. and we're talking about a company that was worth more than a $100000000000.00 and was really seen as a global leader in, in energy. yes, it started, it's live as a natural gas pipeline company in north america. but in march into a financial training power house, you're in the states training, your gas, oil, electricity, even broadband, and whether it is but internationally. we were building power plants and pipelines

and developing countries. and can, may or june for many long term c, e o. and um, really taking pride in our free energy development around the globe. you eventually gave very powerful testimony on capitol hill. you said that you had warned kenley that he was being deceived by several senior executives, including jeffrey skilling, the former c o and c e o. and andrew fastow, the former chief financial officer kinley, seemed to be very concerned at the time. and you recommended that he go public with the information and face the consequences, whatever the consequences were that the market might might put up. but he didn't do that. and in the end, he scaling and fast though we're all prosecuted. how can something like this happen in a company as enormous as in ron, where presumably there are internal and external auditors, accountants,

attorneys, all working to ensure the exact opposite that this never happens. all right, well, um i, i bring up another analogy, emperor's new clothes. i mean that your 40 year old table is not really a children's tale is about human behavior. and just feeling was very intimidate, you know, we hired the sharpest account. it's bankers in the country, you know, you're really going to keep asking questions and prove you don't get it. andre anderson, i was intimidated going along for the long or she's around was saying i'm $52000000.00 a year on it and runs this. but even the banks went all city bank chase and c i, b c. so sharing over litigation for their dealings with in raleigh for $2000000000.00 a piece because they were lending money to in wrong but they knew ron was looking at is free cash flow. so there's almost a sort of safety and numbers like well, if,

if the banks keep money, they must be doing their diligence. i know it is not a risky client. anderson keeps approving it. they're, they're a big, well respected army firm. it must be ok. so this kind of reminds me of f t x, where it's not really anderson's or, you know, the big banks, it's more, there's a leverage step. we're county f t. yes. so in the age to kim car last year you know the reality tv, you don't need anderson development to the bank chase. he just needs deliveries to town that you're ok. and people almost included the well, these kind of organizations when be involved with the fraud. well, you know, they were so i was at the lloyd into sh when much of this played out, i had left the c i and gone into the private sector. and there was a ripple effect here, a very important ripple effect. the collapse of enron also brought the collapse of

arthur andersen, which at the time was the biggest and most important professional services firm in the world. and there were literally thousands of equity partners at at anderson that, you know, one day we're making millions of dollars a year. and the next day we're in the unemployment line. a lot of people were heard by this. a lot of people weren't particularly sorry for the retired or the readers partner. she goes, there patients were in a partnership that were not bankruptcy for. so you know, they were in their seventies retire and they just lost all their retire. unable to really go back to work. same thing happens in ron employees that had their 41 k invested in rob stock in rod shareholders, loss of stock or 60000000000 at the beginning of 2001. but it did have her cool effects on you know, many of our customers that had margin deposits on hold with us. and it was pretty

brutal. yeah, that's tough. jeffrey skilling served more than 12 years in prison. andrew fastow served more than 5 years in prison between them and the state of 10 lay, the 4 freighted tens of millions of dollars in the case was just as served and your view. certainly the company's principles were punished. but what about the shareholders? after all, there were people, as you just said, a moment ago who lost everything when enron collapse. were they ever made home again, as no one was made ho um the there was way 9 or 10000000000 and collected and share shareholders that box years from 98 for our got, you know, maybe 1520 cents on the dollar for their loss. but for many employees, if they've been at the company and, and earned stock options and stock brands in the late eighty's or early ninety's,

they didn't receive anything from that shareholder lawsuit. so it was pretty brutal, but i may say, you know, 20 years in wrong class, i met a lot of whistle blowers and there is a sense that just as was to me that the very top executives were found guilty. they were sent to prison. and there are so many whistle blowers that still have a lot of banks because the people that did the wrong doing the higher ups, they got away with it. they went home rich. um, you know, they might not even be disgrace. just kind of known for being poor leaders or run ran their companies into the ground. but there's a lot of frustration for people to see kind of power and don't see just as happens in, in enron case, people are able to move on and leave it because just as well sir, it does present church. we are speaking with and wrong with the blower share and

watkins, we have a lot more to talk about. so stay with us through this commercial break, we're going to be right back. 2 2 the, the, the take a fresh look around his life kaleidoscopic isn't just a shifted reality distortion by power to division with no real live indians.

fixtures designed to simplify all confused who really wants a better wills, and is it just as a chosen few. fractured images presented as 1st? can you see through their illusion going underground can which i thought that was the little thing is just the rest of the slug restaurants coming up. bless you and they thought clearing this, the post is only thing. you know, the, that the is that i, it's a get a minute come other students need, which is, and you saw on the screen of course to ensure material which is the stumbling. i didn't like the law, but the again is biz, oregon mitchell screw? well, in the middle of something, i mean yeah,

cuz we get presidents and not the degree that the results between you and they will just do that for sure. and i'm comfortable, and which, which, which insidiously similar products in the, the, were speaking with, and run with of lower share and watkins about her experience, trying to head off what at the time was the greatest corporate failure in american history. sure. and you were lauded by members of both parties on capitol hill for your whistle blowing, your honesty and your pursuit of transparency. that's highly unusual. and honestly, i can't even imagine it happening in many cases in today's political environment here in washington. but one of the complaints that i had for my time on capitol hill was that even after successful and important public hearings,

there was usually little or no follow up. was that your experience on capitol hill? did anything good come out of those hearings, new legislation, new regulations, more transparency, um surveys actually it was passed in the summer of 2002 in the wake of the failures of m. bron world common global crossing other other corporate meltdowns. and it did do some good, it totally fine best practices for boards of directors and boards needed to have a certain level of independence. they needed to have the right expertise on the board. and i needed to be without management present. really hoping to increase dialogue and discussion on, on corporate boards. they also implemented an anti retaliation revision. the and how was lower shouldn't be fired or are reprimanded. and that, that happens. but you know, bumps in the road,

but that was good. legislation is required, internal controls to be leased up and the see is had they couldn't use the defense of well i'm not in the can they have to certify that their financial statements were not misleading. i'm so that that was um some, some good efforts. i think um, i often think it's because of 911 that we were not able to to immediately capture osama bin long. and it's like the, the whole new within the spanish or english as well. would you give the international folks, let's get the domestic guys that are doing wrong. mm. sure. and often times these cases drag on for many years. it took about 5 years to bring and runs senior executives to justice. and it took about 15 years for enron to finally cease to exist. that's not unusual. and it's not unusual for very important people to be

caught up in these kinds of cases. one of the people who is no stranger to litigation and this may sound kind of funny to some of our viewers. but if it's former us vice president dick cheney, when he was a sitting vice president in 2004, he took to the courts to protect himself from fall out from his contact with ken lay cheney met with late in early 2001 and he met with other oil company executives and invite a mental group. the sierra club and a conservative watched our group. judicial watch. soon cheney arguing that the energy task force that cheney headed was subject to a 1972 law that required the disclosure of the work of advisory groups that included non federal employees. what happened in that case was the outcome good for whistle blowers and for transparency or no? well, it was not good for transparency that went all the way to the supreme court and they know that those minutes of those energy task force meetings could be how

confidential and classified. and john really brings up a good point and i realize that, you know, it was called an energy task force. and kim, i in wrong ended up meeting with the cheney 6 times in 2001. but what i was that in december and january as in wrong declared bankruptcy. and you know, that was all, all this concerned about in runs and can last time. president bush and the former president bush, or people thought in like you must have requested the immediate inquiries into that. cheney bush cheney meetings, were that thinking on was requesting that happened at the baths? well, you know, kimberly was really kind of clueless and we were in such financial hardships that we were about to implode in a way that the account is due. so i know he was requesting the help because he

didn't realize he needed which he was really adamant that these things remain confidential. and to this day, i believe chaney held discussions about rocks that would indicate possibly, you know, change the way that we were going to evade around before 9 a because he starts portions of i'm happened before 911 and i think there's evidence and those next minutes that there was a strong inclination that we might need some of our energy companies involved in the industry in. right. and um, you know, i really want to see those minutes and see the light of day. and, and let's add to that. i can lay was the former, the national chairman of the or what one of the national chairman of the george w bush presidential campaign in the year 2010. busy was uh, was

a major fundraiser for the bush cheney campaign in 2000. we know that ken lane, dick cheney, we're, we're friends. we know that dick cheney had a special interest in energy as you know, correctly before 911. well, if there's nothing to be ashamed of, then why not released the minutes? right, i was very alarmed at how hard he thought for those to remain quiet in um, given that we, we started the rack. we're in march of 2003 under false pretences of weapons of mass destruction and ties to 911. i think that's why he thought so hard because, you know, there was going to be evidence that it was in their place prior to non. well, one other thing on this dick cheney situation and, and maybe i'm getting

a little too far afield. but i think it, it's worth raising. we know that in the final days of the bush administration, dick cheney lobby, president bush, hard for a handful of pardons. the most important of which was scooter libby, cheney's former chief of staff. i'm actually surprised that cheney didn't weigh in on behalf of ken lay. they've been friends for years, decades, even they were involved in energy at the same time. and kenley never got any relief . you know, i think i have a jamie ambushed, i could read the tea leaves and realized that the, the, the mood in the country was against track, you know, corporate c as the run the company's end to the ground, golf and guy and came down to you know there was no cabinet position offered to can my there was no amnesty job for to come by. right, exactly. sharon,

you recently gave a very interesting interview to the national whistleblower center that i want to ask you about psychologists to deal with with ser blower issues. tell us that it is very rare for a whistle blower to find success after they blow the whistle on waste, fraud, and abuse. in fact, very very few whistle blowers ever make of financial. come back, many lose friends. and in many cases, even their marriages break up, but none of that has happened to you. your experience has been completely different to what do you attribute your continuing success, and what advice would you give somebody considering blowing the whistle? well, i am very happy with the reward the programs and the dog frank at that time. so in the wake of the 2008 um financial crisis because that does allow, was lower to find legal support because there's a way to potentially to pay that, that legal support when a reward a statement. and that's and it also keeps with

a lower than on us. and for me, i don't make the same amount of money i, i would have with corporate career and the corporate career is closed off and i have lost friends. but i am a person in the face and i rely on that phase and it's, it's come through for me in the sense that you know, i'm fairly content and i live with a lot of uncertainty. i do make a living, gave a speech, it is and there's just no certainty as to when those will happen when they want. but i become comfortable with that uncertainty. and i have been really enjoying being able to advocate for whistle blowers and the programs that support to sharon tell us a little bit about your cooperation with the national whistleblower center and other whistleblower groups around the world. and just as importantly, tell us where our viewers can learn more about the work that you do. i write some

dice for that was the lower network news, but i am a proponent and really i want to get the word out on programs that exist through dodd frank and the different last a bit past even recently are changing money laundering. there are now, you know, several law firms that support most of ours and they can for me, kind of as the, as i speak around the globe and certainly in north america, i used to seem to still be unaware of the avenue. so i have to speak truth to power . and so um, i like to do the workshop. you know, i asked, what is the question, how much do you think the fcc has paid out to whistle blowers in the 1st 10 years of that was a lower program to the frank acts initiated? and the guess is, the way you know is over a $1000000000.00 he sees a whole new and all the the,

these programs work there, a check and balance against abuse of our and is it is truly helping organizations behave correctly and look for corruption themselves. and buried it out themselves because if they do wrong, there are way too many avenues. now where they someone who bought it was all of this getting better, you know, from corporate whistle blowers in the private sector. i think we have a long way to go on the look search within the. busy share and watkins, thank you so much for joining us. we're. we're happy to have you. well, listen, john, i won't come on any time. thank you so much for being an advocate for the rest of the program. thank you so much. last year, according to the big for professional services from deloitte whistleblower complaints in the financial services sector were up 35 percent over the previous

year. one of the things that to avoid found was that the popular image of a corporate whistle blower is that of an eccentric loaner. the truth, however, is more prosaic. whistle blowers are usually loyal employees. they're passionate about high standards, about ethics, and about the rule of law. they only go outside the chain of command when nobody takes them seriously. they are not defiant troublemakers. they're disappointed believers, and we need more of them. i'm john kerry. ok thanks for watching the whistle blowers until next time. 2 2 the

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