Inside job

Enron investigator briefs values-based leadership class on corporate ethics

By Aubrey Henretty

November 9, 2007 - While it’s impossible to predict when a company’s senior leadership might cross over from creative accounting to reckless deceitfulness, said FBI Supervisory Special Agent Paul Holdeman, corrupt bookkeepers do have one thing in common: None of them ever said, “I want to commit accounting fraud when I grow up.”

Holdeman, who has been with the FBI since 1998, spoke about his work on the Enron investigation to Professor Timothy Feddersen’s Values-Based Leadership class on Nov. 1. Holdeman’s professional background made him a great fit for the case: Prior to joining the FBI he worked for Arthur Andersen LLP.

“It’s easy to sit here in this environment and say, ‘Oh, I’d never do that,’” Holdeman said, but sometimes it isn’t so easy to resist intense pressure to meet quarterly goals or guard against demotion. It can be tougher still to report illegal or unethical corporate behavior to the authorities — especially for people complicit in it.

During his 90-minute presentation, “The Enron Investigation and the Role of Whistleblowers,” Holdeman gave students an overview of what happened at Enron and how the details surfaced in the 2006 federal district court trial of former CEOs Kenneth Lay and Jeffrey Skilling.

“The key to the entire investigation was that we also developed cooperators on the inside,” said Holdeman. “Without them, the investigation would have been more difficult.”

Holdeman said whistleblowers might come forward to appease their consciences or to protect themselves from the legal consequences of their crimes. Others agree to cooperate with the government only after it becomes clear that mounting evidence will implicate them should they keep quiet.

Throughout the presentation at the Donald P. Jacobs Center, Holdeman answered students’ questions, ranging from the serious (How far down the chain of command does the bureau search for enablers?) to the incredulous (With the overwhelming evidence against them, why did Lay and Skilling not opt for plea bargains? Did they really think they’d be acquitted?).

“People treat them like kings,” said Holdeman, pointing out that Lay once presented the Enron Prize for Distinguished Public Service (now a humorously ironic relic) to then-chairman of the Federal Reserve Board Alan Greenspan. “They don’t see themselves as committing crimes.”