Cynthia Cooper is not a politician and has never run for public office. And yet without her efforts, the Sarbanes-Oxley Act — the most sweeping investor-protection legislation passed by Congress since the Great Depression — might never have been enacted.
Six years ago, following the collapse of Enron, angry lawmakers held hearings, threatened auditors and warned CEOs that sleight-of-hand accounting tricks would not be tolerated. The Justice Department even indicted one auditing firm, Arthur Andersen, essentially putting it out of business.
But by June of 2002, the sound and fury surrounding Enron's collapse had subsided. Congress planned to pass some form of legislation, but the passions that swayed lawmakers in the winter of 2002 had eased. Business as usual was coming back into fashion.
Then WorldCom dropped a bombshell: It disclosed a $3.8 billion accounting fraud of its own, sowing panic among investors. The company filed for bankruptcy protection, wiping out its shareholders, and the public demanded immediate action. Congress complied, passing the law known as the Sarbanes-Oxley Act.
But the only reason WorldCom's board of directors discovered the accounting fraud was through the efforts of the company's internal auditor, Cynthia Cooper, and her dedicated subordinates.
For her efforts, Cooper was named one of Time magazine's "persons of the year" for 2002, along with whistle-blowers Sherron Watkins of Enron and FBI agent Coleen Rowley.
Since then, Cooper, 43, has maintained a low profile, giving speeches to universities and trade groups.
Now, with the publication of her new book, Extraordinary Circumstances: The Journey of a Corporate Whistle-blower, (Wiley, 367 pages, $27.95) we finally get an inside account of what really happened at WorldCom.
It's a powerful tale. Cooper's story has been partially told before, most notably in The Wall Street Journal and in a report prepared for WorldCom's board of directors.
But her adventures at WorldCom come to life in this first-person account. The Mississippi native describes how, early in 2002, at the request of a colleague, she began investigating some unusual accounting entries over at WorldCom's wireless division. Little did she know at the time, but Cooper had picked up a thread that would eventually lead to WorldCom's accounting manipulations.
She approaches a partner at WorldCom's auditing firm, Arthur Andersen, to discuss the matter further. The Andersen partner assures her that any aggressive accounting entries in wireless are balanced out on a corporationwide basis.
The next day, Cooper leaves work early to squeeze in an appointment at the hairdresser. With an 8-month-old daughter at home, it's a rare opportunity for some quiet time. But while she's in the middle of the bleaching process, shrouded in tin foil, with hairdryers blaring all around, she gets a call saying that Scott Sullivan, WorldCom's boy-wonder chief financial officer, wants to speak to her immediately.
She phones in to the office, and Sullivan chides her for snooping around the wireless accounting treatments. He tells her not to discuss the matter with Andersen auditors, but to channel all her queries through his own deputy, David Myers.