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COPYRIGHT 2006 Voxant, Inc.
Original Source: INSIGHT
(BEGIN VIDEO CLIP)
SHIHAB RATTANSI, CNN CORRESPONDENT (voice-over): Enron unraveled. Five years after the corporate scandal that had investors seeing red, are businesses any better? And is the bottom line now black and white?
SHERRON WATKINS, FMR. ENRON EMPLOYEE: I think the problem, basically, at Enron, at many of the corporate meltdowns, is a lack of accountability, with the top guy saying, "I just didn't know." Well, if you don't know, what are you paid the big bucks for?
Well, if you don't know, what are you paid the big bucks for?
(END VIDEO CLIP)
RATTANSI: And welcome to INSIGHT. I'm Shihab Rattansi.
Almost five years ago, one of the giants of American business came tumbling down. Enron, then the seventh largest U.S. company, collapsed under its own weight when top executives padded the company's bottom line with fraudulent accounting and deceptive earnings.
In December 2001, it was clear that Enron's numbers weren't adding up, and the company went bankrupt. Thousands were laid off, many employees lost their life savings, investors lost billions. The scandal sent tremors through Wall Street and the U.S. government passed new legislation to try to protect investors from being left out in the cold again.
It was a corporate revolution that started with an e-mail.
Here's Maggie Lake.
(BEGIN VIDEOTAPE)
MAGGIE LAKE, CNN CORRESPONDENT (voice-over): Consider it the memo heard 'round the world. Words of caution from a concerned employee that helped lead to the downfall of one of the world's biggest companies.
Within months, her testimony before Congress helped usher in the post- Enron era.
WATKINS: Mr. Skilling was aware of the problems.
LAKE: Soon, President Bush was signing off on the Sarbanes-Oxley Act, which aims to clean up corporate America. The downfall of the Enron empire and the fight for the little guy. You could say it all started with one voice of protest.
That voice landed her on the cover of "Time" magazine as one of its people of the year in 2002.
I caught up with Sherron Watkins in the shadow of the Capitol, where she told her story five years ago. In fact, we met at the very same hotel where she stayed before delivering testimony that might have been the death blow to Enron.
(on camera): When you look back at Enron, are there things you would have done differently?
WATKINS: Oh, certainly. Certainly. I saw problems with very aggressive accounting that I personally thought had crossed the line as early as 1996. I made some complaints. I got a lot of push-back. And so I just switched divisions within Enron.
But I look back at it, and that's when I should have gotten with more people and made a much bigger stink, because those transactions in '96 were actually like a seed for what became the fraudulent structures in '99.
LAKE: Do you think that corporate America is less corrupt now?
WATKINS: I think outright financial statement manipulation, the way Enron or WorldCom had done, is certainly less so and less chance of it. For one thing, CEO's can go to prison much easier with the Sarbanes-Oxley Act. However, the Tyco kind of behavior or the Adelphia kind of behavior, where the CEO treats a company's assets as if they were his own, the attitude of entitlement and "me first, the organization second," still seems very prevalent.
LAKE: Businesses have complained that it's been too onerous, and it's actually more the negative than a positive. How do you feel about rolling back some of the Sarbanes-Oxley that was put in place?
WATKINS: I think...
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