This transcript is from a PodTech.net podcast at:
http://www.podtech.net/home/technology/1355/lynn-brewer-author-of-confessions-of-an-enron-executive

Guest: Lynn Brewer - Author
Host: Editor

Anchor

Welcome to the 2006 ARMA International Conference and Expo podcast. This podcast is powered by PodTech, and sponsored by NextPage, the provider of powerful document tracking and retention software.

Lynn Brewer - Author
There's a little bit of Enron in all of us, that we all have the potential to recognize that we have demands on our finances, and we have family, we have elderly parents, we have kids in private school, we have mortgages.

Editor
I'm here with Lynn Brewer, the author of, 'Confessions of an Enron Executive'. Welcome to the podcast Lynn.

Lynn Brewer - Author
Thanks, it's good to be here.

Editor
This is fun, in fact the Enron case just completely opened almost the entire world's eyes on Compliance and Records Management. What was your role at Enron?

Lynn Brewer - Author
I was recruited about three years before the implosion of Enron, to head up a risk management group inside the legal department, that would brief, for senior management and the board of directors, these off the balance sheet partnerships at the centre of the scandal.

Editor
So I imagine you had a lot of interesting risk assessments?

Lynn Brewer - Author
Actually it's interesting, because as I've often said, it always comes down to the records. And that was, that I discovered within about six months of my employment a bank fraud at the tune of a quarter of a billion dollars, based on records that the company had filed, that contradicted the loans that they had taken out from Bank of New York and NationsBank. I think that the biggest thing that quickly set the tone for me within the culture was, when I discovered this bank fraud, I went to my supervisor, and said, you know we have a bit of a problem, and she said what is that, I said, well, the gas (ph) securing this loan doesn't exist. And she said, I'd just leave that audio brief. So, it wasn't so much about destroying documentation, it was just simply turning a blind eye towards the information that I had. And of course, I, like most of the executives were getting plenty of money off of stock options, and so there was this motivation to look the other way for the financial benefit, stock options which in many cases, and many ways makes me no different than Ken Lay and Jeff Skilling unfortunately, but it speaks to the culture that was rampant at Enron.

Editor
What about the current laws that are in place today, Sarbanes-Oxley, and all the other things that have been set up since Enron, do you feel like they're a good gate, or a good rope off for companies in the future?

Lynn Brewer - Author
Well, one of the things I talked about today, with respect to the Records Management group, was that in the year that Enron imploded in 2001, there was about a half of whistleblowing report to the securities and Exchange Commission for every public company. And two years after the passage of Sarbanes-Oxley, and three years after the failure of Enron, the whistleblowing reports had escalated to 51 whistleblowing reports every month, per public company. So basically there are 40,000 whistleblowing reports every month, which means that there's a whole lot of things going on inside corporations, and needless to say there are records reflecting that and there's going to be some pressure to subjugate the rules, and go beyond what they should be doing, and that's going to fall on the Records Management folks.

Editor
Any advice you have for them as they uncover these things, or they're trying to get pressure from a boss or a senior management member?

Lynn Brewer - Author
Well, first of all, with the federal sentencing guidelines that have changed since, well sort of simultaneously with the Enron implosion, it means that people will go to prison relative to the amount of damage caused. So if records retention policies are not clear, and communicated throughout the company, then it can create risk for a company. I think that it's important to know that, well most risk managers don't delve into the content of the document itself, those people who have sought to destroy documents, certainly there's an indication that the documents have information, that if they're asking things to be destroyed, then it might create some problems.

Editor
So what do you see coming in the next two to three years? Is there a forecast you see based on your past history, and even your book and your research?

Lynn Brewer - Author
Well I think we're now beginning to see appear in stock options, the backdating of stock options. And so, one of the things that companies need to get to, is this concept of a single version of the truth, that they understand the metadata that's out there, and the DNA of their companies. I have started the Integrity Institutes since leaving Enron, and we measure corporate integrity on a quantitative level versus qualitative, and we look at risk relative to how data is stored, and how it is transferred, because we believe that's the key indicator as to risk within a company. Not necessarily the typical risk assessment that's required under Sarbanes-Oxley or risk and insurance, but really how does a company store it's data, is it respectful of data privacy, and all of those issues that are becoming so important to all of us.

Editor
Any case histories, or any insight you want to share with someone who's trying to put together the Records Management practice?

Lynn Brewer - Author
Well, I think that obviously ARMA with their best practices has their finger on the pulse, day to day of those things. And I think that, unfortunately what happens in many corporations is, that people that are making personnel decisions don't understand the level of expertise that's really required to do this job right, and reduce risk for the company, they simply sort of assume it's a file clerk position, and that's clearly we're way beyond that. Information management people today have to know the latest technology, and what to look for. I mentioned today a website called http://www.internalmemos.com/ where any employee can post internal memos that they have on a public website. So you see all sorts of things, trade secrets being revealed out on the website, so thinking that you can protect data with the internet today is just not reality. And so transparency really has to begin from within, and that transparency begins with really good systems and tools and technology.

Editor
So, a lot of this is not necessarily technology, it's a cultural thing.

Lynn Brewer - Author
Absolutely, it's a cultural thing. I used the example today, unfortunately, of Coca-Cola, where they have consistently done things that have brought them to the light of their stakeholders, to the point that they traded what they did ten years ago, simply because they're taking market studies and falsifying results, and passing them off, and then they're getting into the accounting department. The accounting department is seeing things differently, and I mean it always comes down to the records, it always comes down to the records. And unfortunately, fortunately or unfortunately, ethics will never keep up with technology, because of just the advances that are made on a daily basis. You look at the CEO of Boeing, he signs a purchase order that allows emails to be viewed for issues such as trade secrets being revealed, and we suddenly see that his own emails are being scanned, and suddenly his illicit affair is revealed, and he's fired, so it goes on and on and on. And you're absolutely right. I mean I think that the tone does start at the top, and it has to create the culture that looks at preservation of records and information and data, and all of that.

Editor
Your institute, is there anything that you have to share about success from that, so far?

Lynn Brewer - Author
Well, it's a long haul, I think is the best way to put it. There are companies out there that are really doing great things in a lot of areas, and unfortunately, especially with the latest scandal with the stock options, I mean, you begin to look at companies like Apple, who are suddenly in this dilemma of having to justify backdating stock options when many, many, many companies do it as a result of employment offers, and that kind of thing, they will back date offer letters. So recognizing these companies that are doing the right thing, and are doing great things for the integrity that they do have, and they should be recognized, and they should be promoted, and that's what we really want to do at the Integrity Institute, is become a good housekeeping seal of approval. Meanwhile out there in the market place you have short sellers, so you have brokers who are loaning out your stock certificates that you don't have to other people, so they can drive stock prices down. I mean it's a very different world, and at the forefront of that is the information management, and data retrieval and all of that.

Editor
What about the smaller companies out there that aren't trading on the market, that are faced with this dilemma as well, is there any insight you'd give to the smaller organization that's trying to put together a practice?

Lynn Brewer - Author
Well I think that what we're learning is, even with small companies who want to at some point be acquired by a large company, the large companies are going to look at them, and they're going to look at the processes they have in place, and if they're looking for short term gains in order to sell the company, they're going to be looked at as an Enron. And so it's just easier to start out right. For small companies, I mean, use the resources of ARMA to help you built that practice, right from the first start. I just spoke with somebody today who used to be with Winson and Elkins, and is now with a small energy company, and she said, we're doing great things there. And that's so important to do these great things even as a small company.

Editor
So how's it been being an author?

Lynn Brewer - Author
Well it's been at times challenging. I think that both good and bad in the sense that your life is no longer your own. I don't really have a private life anymore, or at least it feels like that sometimes. But at the same time, I'm out speaking with people, and today, we had a packed room, people sitting on the floor, and awe struck, I think in many ways that -- to recognize that there is a little bit of Enron in all of us, that we all have the potential to recognize that we have demands on our finances, and we have family, we have elderly parents, we have kids in private school, we have mortgagees, we have car payments, that I think people say, I probably would have done the same thing. And I think that's the message that I keep hearing back from people, how tough this must have been, and so to me, if I can keep one person from making a bad choice, and ultimately ending up in prison, then I have done my job.

Editor
That's great, I appreciate the story, I appreciate your time here at the ARMA International Conference and Expo. Congratulations on your current success, and your willingness to share that and help others, I think that's an amazing, I guess internal change for you to be able to take what you're learned, and turn it into something positive for the market.

Lynn Brewer - Author
Absolutely. Thank you very much for having me.

Anchor
This ARMA International Podcast was powered by PodTech, and sponsored by NextPage. Visit ARMA on the web at www.arma.org. For more information about NextPage, and its desktop document retention solution, go to www.nextpage.com. This podcast was recorded and produced by Rocky Mountain Voices.

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