A former Enron accountant who blew the whistle on fraud at the energy giant says she doesn’t trust the Securities and Exchange Commission to handle tips from company insiders, even though the agency plans to offer a generous new bounty for information about fraud.
“I don’t think the SEC’s culture is one that will make this effective one iota,” said Sherron Watkins, a one-time vice president at Enron, referring to expanded protections for whistleblowers included in the Dodd-Frank financial reform law.
If she was in the same situation today as 10 years ago, when Watkins approached government authorities about accounting fraud at Enron, she would probably instead take her information to an organization like WikiLeaks, Watkins said.
In August 2001, Watkins warned then-Enron chief executive Ken Lay that Enron “might implode in a wave of accounting scandals.” After she was ignored, she told her story to government investigators. But by then it was too late and Enron had begun collapsing under the weight of allegations of massive fraud at the Houston-based energy giant.
The government watchdog charged with overseeing the $700 billion bank bailout fund is claiming broad success in cracking down on individual and institutions that tried to misuse the money.
Neil Barofsky, the special inspector general of the controversial Troubled Asset Relief Program (TARP), told the Center for Public Integrity that his office is conducting 142 ongoing criminal and civil investigations, many in partnership with other law enforcement agencies.
In the past two years, the watchdog has recovered $152 million in stolen assets and saved another $555 million through fraud prevention. Barofsky said his office is investigating the potential fraudulent use of TARP money at 64 separate financial institutions, which he said ranged in size from small banks to big ones.
But for the most part, Barofsky won’t say who he is investigating, for what crimes, or when charges might be filed. Nor would he comment on broader criticisms leveled at federal authorities for failing to bring the architects of the financial collapse to justice.
“I understand that criticism that people want to see more people put in jail and locked up for these crimes,” he said.