Enron is one of the most infamous examples of corporate fraud in U.S. history. The scandal that

destroyed the company resulted in approximately $60 billion in lost shareholder value. Sherron Watkins,

an officer of the company, discovered the fraud and first went to her boss and mentor, founder and

chairperson Ken Lay, to report the suspected accounting and financial irregularities. She was ignored

more than once and eventually went to the press with her story. Because she did not go directly to the

SEC, Watkins received no whistleblower protection. (The Sarbanes-Oxley Act was not passed until after

the Enron scandal. In fact, it was Watkins's circumstance and Enron's misdeeds that helped convince

Congress to pass the law.40)

Now a respected national speaker on the topic of ethics and employees' responsibility, Watkins talks

about how an employee should handle such situations. "When you're faced with something that really

matters, if you're silent, you're starting on the wrong path . . . go against the crowd if need be," she said

in a speech to the National Character and Leadership Symposium, (a seminar to instill leadership and

moral qualities in young men and women). Sometimes employees, including managers, face an ethical dilemma that they seek to address from within rather than becoming a whistleblower. The risk is that they may be ignored or that their speaking up will be held against them. However, companies should want and expect employees to step forward and report wrongdoing to their superiors, and they should support that decision, not punish it. Sallie Krawcheck, a financial industry executive, was not a whistleblower in either the classical or the legal sense. She went to her boss with her discovery of wrongdoing at work, which means she had no legal protection under whistleblower statutes. Read her story in the following box. Watkins talks openly about the risk of being an honest employee, something employees should consider when evaluating what they owe their company, the public, and themselves. "I will never have a job in corporate America again. The minute you speak truth to power and you're not heard, your career is never the same again."

Enron's corporate leaders dealt with the looming crisis by a combination of blaming others and leaving

their employees to fend for themselves. According to Watkins, "Within two weeks of me finding this

fraud, [Enron president] Jeff Skilling quit. We did feel like we were on a battleship, and things were not

going well, and the captain had just taken a helicopter home. The fall of 2001 was just the bleakest time

in my life, because everything I thought was secure was no longer secure."

1. Did Watkins owe an ethical duty to Enron, to its shareholders, or to the investing public to go public with her suspicions? 1a)Why

2. How big a price is it fair to ask a whistle-blowing employee to pay?