Houston. Monday, April 1.
Sandra Schafer, C.P.A., loved and needed her job. She was employed as an internal accountant in the Houston headquarters of Enerco. She had been with the company since she received her State of Texas certification in 1997. She was thirty-two, married, and the mother of two, a boy and a girl, both attending expensive private schools. David, her husband, was an engineer with N.A.S.A, also in Houston.
She was deeply troubled. For the past six months, she had agonized over the questionable money shuffling and commodity trading activities of her employer. The trades, made by of myriad of the company’s subsidiaries, many of which were domiciled in tax haven jurisdictions, were large, aggressive, and highly leveraged. In her spare time she had managed to cobble together a tapestry of the Enerco trading structure. When she finally connected all the dots, the picture astounded her. The company had almost three thousand trading subsidiaries, forty-two percent of which were incorporated in tax advantaged countries. Ground zero was Grand Cayman Island. Her research led her to three conclusions: the company was hiding, via the mechanism of ‘off balance sheet’ transactions, colossal trading losses from its shareholders, the company was evading taxes on its trading profits, and the company was fraudulently reporting enormous unrealized mark to market profits in its quarterly report to shareholders. She further discovered that Enerco senior management, namely Ken Layton, Jeffrey Wheeler, and Andrew Speers, were conducting a massive pump and dump operation. While publicly touting the success and fabulous future of the company and illegally over-stating revenues and profits, all three were simultaneously selling Enerco stock as fast as their absurdly generous options made it available. Equally troubling was the obvious complicity of Benjamin, Alexander & Gabriel LLP, the huge and respected multi-national accounting firm responsible for certifying the accuracy of the company’s financial reports.
Stretched to the limit of her conscience, she approached her boss, Clarence Soloman, a nerdy, shiny-assed book-keeper who had been with Enerco since the day it was born in 1989. Primarily the result of his fanatical dedication, work ethic, and a healthy dose of ass-kissing, he was now the managing director of accounting for the company’s worldwide operations. His boss was Andrew Speers. Soloman was fifty-eight, fat, almost completely bald, and way too close to his much anticipated and cherished pension to even think of rocking the boat. “Can we talk?” she asked, prompting Soloman to frown. “Something’s bothering me, and you’re the only person in the entire company who I think will listen to me.”
“Certainly,” Soloman said, hiding a yawn with his fist and wishing Schafer would just go away and leave him alone.
“I need this conversation to be off the record. Can you live with that? If you can’t, I’ll find someone else.”
Soloman’s facial muscles tightened, his face reddened. “What’s it about?”
“Enerco. It’s breaking the law, and I can prove it.”
“I’ll show you, but first I need you to promise that everything we say in this room today is off the record.”
Soloman’ response was instant and definite. “I don’t want to know about it,” he said, even though he already did. His position had given him a box seat to witness the company’s transgressions. “If you can prove the company’s breaking the law, then it’s up to you to report what you know to the appropriate authorities... Just don’t get me involved. I’m less than seven years from retirement, and I’m not prepared to mess with it.”
Soloman’s refusal to ‘get involved’ made it clear to Schafer that appeasing her conscience would require finding someone else in the company who was prepared to listen to her, or stepping forward herself, becoming a whistle-blower, and risking her job. Her choices were challenging in the extreme. The Enerco culture resembled a communist country. Everyone was under constant observation. Anyone who risked criticizing management experienced a downward sloping career path, or worse. She knew of no other Enerco employee she could trust with her information. She worried that whoever she talked to might expose her rather than help her. Keeping her job was crucial. In spite of their combined six-digit income, she and her husband were barely making ends meet. Their children’s college fund and the mortgage payments on their new thirty-five hundred square foot suburban home left no disposable income. “I understand,” she said, furious with her spineless boss. She stood and turned to leave.
“Wait. Don’t go,” Soloman said, causing Schafer to stop. “I have a suggestion for you. It’s obvious that you’re pissed and won’t stop until you’ve done something... I know a person you should talk to.”
“Who?” Schafer asked, her curiosity aroused.
“Would the name Kerri King ring a bell with you?”
“It certainly would. She’s been in the news every day for the past week. She’s the Iacardi Santa Claus... Why do you think I should talk to her?”
“Enerco just bought Iacardi. Coincident with that purchase, Kerri King was ousted as Iacardi’s president and chief executive officer. I don’t profess to know all the details, but it certainly seems strange to me that the Iacardi management would dispose of a president who had just given almost a half a billion dollars to the estates of the employees who were killed in The World Trade Center. What on earth were they thinking? So now they’ve offered her a job with Enerco. She’s supposed to be the new vice president of trading, reporting to Jeffrey Wheeler. I’ll be shocked if she accepts it. I understand her Iacardi stock is worth at least ninety million... Now I’m going to give you a private thought. It’s for your ears only. If you breathe a word of it to anyone, I’ll deny it... I agree with everything you’ve just told me about what’s going on inside this company. Furthermore, I think Ken Layton, Jeffrey Wheeler, and Andrew Speers are thieves. They should be thrown in jail for what they’re doing. I also think the management of Iacardi should be thrown in jail for what they’ve done to Kerri King. In any event, I’m sure she would be delighted to be given an opportunity to give the whole lot of them a little retribution. Now if you want to take this thing further, I’ll contact Human Resources and get Miss King’s telephone number and email address.”
Schafer rounded Soloman’s desk and planted a big kiss on the top of his bald head. “Thanks, Clarence. I was about to leave here thinking you were an asshole. Now I think you’re wonderful... That’s just a private thought. If you breathe a word of it to anyone, I’ll deny it.”