Sarbanes-Oxley compliance subject of NY discussion.

• Author: Marshall, Jeffrey
• Position: Domestic News - Panel Discussion

The fraud at Enron Corp. was the single biggest trigger for the Sarbanes-Oxley Act, so it was appropriate for a former Enron executive to keynote a recent executive seminar, "Transforming Sarbanes-Oxley Compliance Into Competitive Gain," sponsored by Accenture and SAS. The November 6 event at the New York Stock Exchange also featured a panel discussing the Act's impact on the markets and on their customers.

Lynn Brewer, who turned her three years at Enron into a book--House of Cards: Confessions of an Enron Executive--offered an intriguing insider's glimpse into some of the wrongdoing at Enron. She actually kicked off her talk by playing a 1998 corporate video from Enron featuring extensive remarks from former Chairman Kenneth Lay and former President Jeffrey Skilling, whose discussions about how Enron constantly tried to innovate and think "out of the box" may have presaged some of the financial tricks the company was later accused of.

Brewer, who held positions at Enron in risk management, competitive intelligence and e-commerce, says she personally became aware of a quarter-billion-dollar bank fraud involving nonexistent collateral, gas contracts being transferred regularly from one subsidiary to another just before a quarter would end and a 300-times-normal elevation of carbon dioxide in water pipelines--a highly dangerous condition. All of these problems were shrugged off by higher-ups, she alleged.

Not surprisingly, Brewer said she became convinced that the problems started at the top and permeated the culture. "You need to open the organization to complete and utter transparency, internally," she said. "Transparency and compliance should not be seen as distinct and separate objectives."

She urged companies to emphasize their telephone hotlines, and to establish a Web-based system for complaints as well. She noted that when she took her complaints about Enron to a phone hotline, she was told that the hotline service worked for the company and that she would have to take her complaint to a lawyer in private practice.

Brewer offered the audience a series of risk mitigation ideas, among them: separate management from oversight; bring in external assistance to help assess and develop policies; thoroughly communicate company policies and a code of conduct; assess weakness in internal controls, and reassess risks and controls annually, weighing new processes...