by Craig Hannaford, CGA
Can we learn from the lessons of Enron and Madoff to help us deal with ethical dilemmas and show leadership in business?
Remember Sherron Watkins? If her name is not familiar, it may only be because — less than a decade after the Enron accounting scandal—Bernie Madoff has replaced Kenneth Lay in the rogue’s gallery of public opinion, and we now talk about Lehman Brothers and AIG more than we talk about Enron. Watkins was the vice-president of corporate development at the disgraced energy company, but today is most often referred to as its whistleblower. A certified public accountant with a master’s degree in professional accounting from the University of Texas, Watkins joined Enron after working for the poster child of accounting fraud, auditing firm Arthur Andersen, for eight years. She was in Hamilton recently, as the guest speaker at the 30th Annual Mc- Master World Conference on Economic Crime Prevention, and had a lot to say about blowing the whistle on “the smartest guys in the room.”
Why was the Enron financial scandal not exposed earlier? Why did it take years before a concerned employee came forward? Why did no one stop the “smartest guys” when the lights went out in California? Ms. Watkins cited four key factors that could be applied to many organizations and their employees:
- fear of losing one’s job
- fear of rocking the boat and being ridiculed
- an “it’s not my concern” attitude
- a “group think” culture that does not tolerate criticism of the corporate viewpoint