Sherron Watkins on Enron

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Fraud Magazine editor Dick Carozza did an interview with Sherron Watkins, the internal [tag]whistleblower[/tag] who started raising hell at [tag]Enron[/tag] when she started discovering problems with the numbers. He asked Sherron why the Enron [tag]fraud[/tag] happened… whether management lost its way or whether the company was destined for problems. Sherron’s answer:

Many experts summarize “what happened” at Enron using two words, greed and arrogance. An accurate summary, I agree, but it fails to help others learn from Enron’s demise. How did greed and arrogance run amok at Enron? How did a company’s culture breed not only corruption from its own employees but also disreputable behavior from the outside auditors, lawyers, consultants, and lenders?

What happened? It was a complete breakdown in moral values. But the scary part is that the breakdown was not done by outright intention but more by small steps in the wrong direction.

Enron’s leaders set the wrong tone, so did Arthur Andersen’s leaders. [Arthur Andersen was Enron’s external auditor.] In the end, both companies put revenues and earnings above all else – the means by which those earnings were generated did not matter. Were laws broken? Yes. Were lives devastated by it? Yes.

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