Enron shut down workers crying foul

I simply cannot shake from my head thoughts about “Conspiracy of Fools” (Broadway Books, 2005), the compelling narrative about the Enron demise written by Kurt Eichenwald.

Assuming the book is accurate, I have been operating on a misconception for some time. In this column and in seminars I have marveled that Sherron Watkins, one of the Time Magazine people of the year for her whistleblower role, was the only person who cried foul at Enron. I have lamented that so many other people at that company were silent in the face of bad management, ethical missteps and illegal behavior. In a March 10, 2003, column, I condemned a lack of personal courage and the “mind-your-own-business” mentality of our current culture.

Eichenwald’s book has convinced me I was wrong. Watkins was heroic, but countless other people from Enron and also from Arthur Andersen attempted to stop the insane double-dealing, deceit and conflict of interest at Enron; they were rebuked and suppressed.

Carl Bass could have saved the Arthur Anderson firm from going down with the Enron ship if his superiors would have listened to his warnings. He became convinced he simply didn’t have the authority to stop the shenanigans. Eventually, the Enron people forced him off their account, calling him an “impediment.” That was a clear pattern at Enron: if anyone suggested wrongdoing, they were considered a hindrance and ousted.

An Enron employee named Vince Kaminski and his group were moved out of a key review position because they were raising critical questions about some of Enron’s transactions. The No. 2 man in the organization, Jeffrey Skilling, called Kaminski one day and told him there had been complaints that he was not helping people do transactions. Skilling is reported to have said, “Instead, you’re spending all your time acting like cops.” Pause. “We don’t need cops, Vince.”

Obviously, Enron needed cops more than most companies, but every organization needs cops. If people are bringing all their values and their total ethical sense to work, they must be allowed and encouraged to raise red flags about individual and corporate behavior.

One of the most unsettling scenes in Eichenwald’s book is a conversation in a Houston restaurant bar between three fairly well-placed Enron executives. In that social setting, all three discussed the impropriety of the clear conflicts of interest. Even though they thought the decision was stupid, they accepted it because the board approved it. Directors and executives get sandbagged all the time. Just because top people have approved something it cannot be assumed it is correct, or even legal.

One of Skilling’s horrible management techniques was a major factor in squelching whistleblowing. On several occasions, when somebody would complain about the unethical behavior of Andrew Fastow or Michael Kopper, Skilling would order the complainant to talk to Fastow or Kopper. They were inevitably greeted by out-of-proportion rages, clever evasion, and sometimes, by outright lies.

When Skilling heard those complaints, he needed to take personal responsibility to investigate and confront. He needed to protect the people raising the complaints and he needed to seriously entertain the truth of their charges. Instead, he automatically believed the wrongdoers, presumably because it was in his and the company’s financial interest.

The stunning and disturbing thing about the Enron debacle is that so many people knew things were very wrong and nobody felt they had the power to do anything about it. True leaders must create an environment that encourages, protects and respects potential whistleblowers. The survival of your company could depend on it.

Tip for your search: If it smells as if there’s something burning, look for the fire. Do not stand by and wish the deal didn’t smell. Improper behavior can bring your company down and you need to have the courage to yell “Fire!”

Resource for your search: The Resiliency Advantage: Master Change, Thrive Under Pressure, and Bounce Back From Setbacks by Al Seibert Ph.D. (Berrett-Koehler Publishers Inc. 2005)