Lynn Brewer Interview, Great Lakes Journal, May 2004

Initially, I was recruited to head a risk management group that
would, among other things, brief the “off-the-balance sheet partnerships”.

Within six months, I discovered what appeared to be bank fraud when I learned the gas securing a ¼ of a billion dollar loan did not exist.

I would then discover the initial gaming of the power price market in the midwest in the summer of 1998, when Enron drove prices on power from $35 megawatt hour to $10,000 per megawatt hour in a 24 hour period. Ultimately, I would assist in the trading of power in California in 2000 when the blackouts began which is where I was able to witness first-hand just how Enron was manipulating power.

In 1999, I would discover the husband of CEO, Rebecca Mark-Jusbasche, Michael Jusbasche was committing espionage by stealing trade secrets and then selling them back to the company.

Ultimately I would witness and confront COO Jeff Skilling on his blatant overstatement of its financial position to the media and analysts.

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Interview, Lynn Brewer, Great Lakes Journal (May 13 2004)

Interviewee: Lynn Brewer Date: Thursday, May 13, 2004 Interviewer: Lynn Ingberg

Biography
Lynn Brewer, Author of Confessions of an Enron Executive: A
Whistleblowers Story

Lynn Brewer’s notoriety stems from her actions that have dubbed her “the Enron
Whistleblower”. Her accomplishments include: Author of Confessions of an Enron
Executive: A Whistleblowers Story; Earning a Certification in Business Ethics from
Colorado State University; Founder and President of The Integrity Institute, Inc.,
which assesses and certifies corporate integrity at the request of organizations
for the benefit of their stakeholders.

Prior to joining Enron, Ms. Brewer worked in forensic accounting and spent 18
years as a legal professional in private practice, until she joined Ralston Purina,
where she worked in Corporate Development for the General Counsel and Chief
Financial Officer.

As an executive at Enron, Ms. Brewer was responsible for Risk Management in
Energy Operations, the e-Commerce initiatives for Enron’s water subsidiary, and
Competitive Intelligence for Enron Broadband Services. Her responsibilities
included financial derivatives and the now infamous “off-the-balance sheet”
partnerships.

During her nearly three-year tenure, she witnessed numerous instances of illegal
and corrupt dealings, including bank fraud, espionage, power price manipulation
and the gross overstatements to the press, public and financial world. When her
attempts to notify those inside Enron of her knowledge failed, she notified the
United States government, who refused to return her e-mails and telephone calls.
Since leaving Enron, Lynn Brewer has become an internationally recognized
speaker providing compelling details into Enron’s rise and fall, leaving audiences
shocked when they realize how vulnerable they are to becoming the next Enron.

Interview

Lynn Ingberg: What were some of the things you discovered that began your
search to look deeper into the actions of Enron and its executives?

Lynn Brewer: Initially, I was recruited to head a risk management group that
would, among other things, brief the “off-the-balance sheet partnerships”.
Within six months, I discovered what appeared to be bank fraud when I learned
the gas securing a ¼ of a billion dollar loan did not exist.

I would then discover the initial gaming of the power price market in the midwest
in the summer of 1998, when Enron drove prices on power from $35 megawatt
hour to $10,000 per megawatt hour in a 24 hour period. Ultimately, I would
assist in the trading of power in California in 2000 when the blackouts began
which is where I was able to witness first-hand just how Enron was manipulating
power.

In 1999, I would discover the husband of CEO, Rebecca Mark-Jusbasche, Michael
Jusbasche was committing espionage by stealing trade secrets and then selling
them back to the company.

Ultimately I would witness and confront COO Jeff Skilling on his blatant
overstatement of its financial position to the media and analysts.

Lynn Ingberg: When you told your supervisors about your findings of
wrongdoing, what did they say as to the company’s rationale?

Lynn Brewer: Most of the responses I received every time I “blew the whistle”
appeared to be the same – little or no regard for the severity of the situation –
rather I was told to cover it up. Believing I didn’t have all of the details I did as I
was told. In my mind, I couldn’t imagine at the time, a company the size of
Enron, or any company for that matter, wouldn’t intentionally commit bank fraud,
espionage, manipulate power prices, or overstate their financial position – I
would later find out how wrong I was.

Lynn Ingberg: I understand that the operator for Enron’s employee assistance
phone number (Enron’s “confidential” hotline) stopped you from detailing the
ethical issues you came across, because Enron operated the employee assistance
service. What gave you the courage to tell what you knew? What made you
decide to contact the head of the Energy Commerce Committee that ultimately
investigated Enron?

Lynn Brewer: The deciding factor to go outside the company to call Enron’s
employee assistance program was based upon a potentially life-threatening
disease brought I believed by the stress I had undergone in my nearly three
years at Enron. Enron had an “internal” hotline that was answered internally by
the Office of the Chairman’s own Rebecca Carter, then Jeff Skilling’s girlfriend,
now his wife. And then they had a 3rd party employee assistance program which
is what I called and I did lay out for the woman the details of the corruption
which is when she said “Ma’am, inasmuch as our fees are paid by Enron, I can’t
take your call, you’ll have to hire a private lawyer.” That’s when I went to the
government – to the head of the Energy Commerce Committee – which
investigated Enron. The Department of Justice and the Securities and Exchange
Commission were both run by appointees of the Bush Administration – the same
administration that Enron was the biggest financial supporter of – so I did not
actually trust the government which is why I went to Senator Byron Dorgan’s
office – unfortunately they have no record of my contacting them – despite my emails
and phone records.

Lynn Ingberg: The Sarbanes-Oxley Act of 2002 mandated that all public
companies provide a confidential and anonymous whistleblower hotline for
employees to report financial issues. What would you say to an individual who
may have access to information about their employer’s fraud to think about when
making a decision to tell or keep it to themselves as so many of your fellow
Enron employees did?

Lynn Brewer: Report it. Under the revised Federal Organizational Sentencing
Guidelines, the mandatory sentencing if found guilty for covering up or
contributing the fraudulent acts requires severe penalties. Take Jamie Olis, for
instance. A mid-level executive from Dynegy (a competitor of Enron’s) was
sentenced to 24 years in prison about a month ago for his role in putting together
a structured finance deal. While his supervisors both pled guilty, he rolled the
dice and unfortunately, there is no “time off for good behavior” in federal court.
He is 38 years old and has a wife and a six month old daughter. He will have
absolutely no influence in her upbringing. The “cost of compliance” is far too
costly whether we are talking about soldiers in Iraq or mid-level executives in
corporate America.

Lynn Ingberg: Since this is a technology publication, it would be remiss of me
not to mention your involvement in a new technological advancement: The
confidential reporting system. Is this a good step in the right direction?

Lynn Brewer: I have, in the past, provided advisory guidance to a company
called EthicsPoint which provides the most comprehensive integrated means for
employees to anonymously and confidentially report financial fraud or other
ethical shortcomings. Sarbanes-Oxley Section 301(4)(a) and (b), requires the
“receipt, retention, and treatment of the problem”. The EthicsPoint system is the
only system I have found that allows each component of Section 301 to be met
with a single system, while maintaining the confidentiality of the reporter
throughout the process.

I believe this section of SOX may actually become the Achilles heel for most
companies as the class action lawyers begin to ask for incident reports in the
discovery process. If a company does not have a comprehensive reporting
system, companies may find themselves suddenly having to defend themselves
in a criminal action by the Justice Department, when it is revealed they have
failed to comply with the law.

Lynn Ingberg: Your book, Confessions of an Enron Executive: A Whistleblower’s
Story, talks about the illegal transactions and the dishonest people who planned
and executed them. What would expect Ken Lay and Jeffrey Skilling’s response
be if they were to read your book? Have you been pleased with the response
from the public thus far?

Lynn Brewer: I think Ken Lay would be pleased that I don’t point too many
fingers at his unfortunate ignorance about what was occurring while the “cat was
away”. Jeff Skilling, on the other hand, was the proverbial “mouse” who was at
play. He underwent a lie-detector test the day immediately following Enron’s
bankruptcy filing to prove his innocence. He would likely deny any of the
anecdotes about my interactions with him even took place. While Jeff’s 15
minutes of fame are going to eventually come to an end, I hope to have 15 years
of impact.

Note from the editor: Mark Powers

I would like to thank Lynn Brewer for providing the Great Lakes Journal the
opportunity to interview her and to learn about her incredible experience with
Enron. If you have any questions about this interview or would like to learn more
about Lynn Brewers story or her company The Integrity Institute please contact
Lynn Ingberg, Great Lakes Journal.

I would also like to thank Lynn Ingberg for her time and efforts conducting the
Lynn Brewer interview. Please feel free to contact Lynn Ingberg at
lynni@greatlakesjournal.com