Former US-based Enron finance chief Andrew Fastow, who served six years' jail for fraud, has told a Singapore audience of his role in one of the biggest corporate scandals in American history.
Mr Fastow, 53, speaking pro bono at the Asia-Pacific Fraud Conference last Friday, warned it is the market that will decide if boundary rules have been breached and will show its discomfort through market disruptions. "It will take only one deal that is out of bounds to let the market turn on you," he added.
The three-day conference at Marina Bay Sands Convention Centre, organised by the Association of Certified Fraud Examiners (ACFE), Singapore Chapter, attracted about 250 foreign and local delegates.
The meeting discussed the trends in fraud prevention and heard experts' insights on best practices.
Texas-based energy trading giant Enron imploded in 2001, leading to the conviction of Mr Fastow, among others, for being a key figure in using entities to hide Enron's huge losses.
"It took me a long time to articulate what I had done wrong," he told the audience.
He said he once explained this to his eldest son to show the difference between principles and rules.
His son was puzzled as to why he was in prison as he had received permission to do the deals in his job.
"Suppose you went out to a party using the car and your parent said 'yes' on condition you don't drink alcohol," he had said. "You agree, but someone at the party offers you a beer tablet and says the effect is the same as the drink, but you won't be breaking the rule as you will not be drinking beer.
"I was like the beer-tablet pusher, pushing to undermine the rules."
He said Enron had vigorous compliance measures but stressed "the question is not whether there is a system in place to catch, but what is it you are going to catch".
ACFE Singapore Chapter president David Rule said: "Fastow's case study, showing companies with off-balance-sheet accounting practices, highlighted some of the things we are seeing. We... will continue with training and international speakers to help our members identify and investigate fraud."
