Whistle-Blowing: Enron

In: Business and Management

Submitted By ethicspaper
Words 1358
Pages 6
Whistle blowing is an act to disclose an organizational wrongdoing to parties that can take action. Sherron Watkins was the vice president of Enron Corporation that became a whistle blower in 2001. She sent an anonymous memo to Enron Chairman Kenneth Lay regarding the misstatements on the financial report. Enron hired lawyers from Vinson & Elkins to do an investigation on the financial misstatement allegations (Ackman, 2002). According to the memo from the investigations, after Watkins identified herself Lay held a meeting with her to discuss about her concerns regarding her allegations. The memo failed to indicate what Lay told Watkins. The investigation from Vinson & Elkins concluded that the questionable transaction that Watkins was concern about appeared proper (Ackman, 2002). Dan Ackman from Forbes argued that her action was not considered as whistle-blowing because she did not send the memo to parties that can take disciplinary action but actually provided legal cover for Kenneth Lay. Also, the fact that Watkins warned Lay about the misstatement of financial report indicates that Lay was not aware about the problem and did not do it on purpose. Watkins tries to put the blame mostly on Enron’s auditor Arthur Andersen and Vinson & Elkins and continued to provide cover to Lay and the board.
Attitudes towards Whistle Blowing In today’s society, whistle blowing is viewed as misconduct and usually will cost a person’s job. In Watkins case, she said that Enron’s former Chief Financial Officer Andrew Fastow wanted to fire her and seize her computer (Ackman, 2002). However, she kept her job and even outlasted Lay whom quit the job and Anderson whom got fired. A whistle blower is also considered by the society as somebody that betrays the company. The Sarbanes-Oxley Act of 2002 which was commonly known as SOX was introduced in response to a number of major…...

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