Enron Whistleblower: Reaction Was to Quit
The New York Times
April 2, 2002
By REUTERS
Filed at 0:07 a.m. ET
HOUSTON (Reuters) - The woman
who first warned Enron Corp.
top management of
potential accounting fraud said on
Monday her first reaction was to
quit when she learned about
off-balance sheet deals that
eventually killed the energy firm.
``My first reaction was to leave Enron and find another job,''
Enron's Sherron Watkins said.
Employees who worked with the partnerships spoke about
them ''without any kind of alarm in their voices,'' Watkins
told an audience at Rice University in Houston.
She is the Enron employee who warned former Chief
Executive Officer Ken Lay last August that Enron would
``implode in a wave of accounting scandals'' because of
off-balance sheet deals it had done.
The deals were fraudulent on their faces because the debts
they purported to shunt to third parties were in fact backed
by Enron's declining stock.
She was working at an Enron unit run by former Chief
Financial Officer Andrew Fastow, who left after the
partnerships he helped engineer and operated from both
sides of the table became public. Their disclosure triggered
Enron's death spiral.
But just because their inner workings have been made
public, prosecutors seeking convictions are going to have a
hard time explaining the fraud simply to a judge or a jury,
Watkins said.
``It's going to be hard to understand that this is the
equivalent of a Ponzi scheme,'' Watkins said. The Justice
Department has convened a special grand jury and a task
force to investigate Enron.
Watkins also bemoaned the fate of employees who ring
warning bells, saying there is a disincentive to reporting
wrongdoing.
``You are not rewarded for it,'' she said. ``You're seen as a
naysayer.''
Watkins has been rewarded, however. She still has a job at
Enron despite its bankruptcy, is appearing on the lecture
circuit and has negotiated a fee for her participation in a
book about Enron that fetched a reported $500,000 advance
for its Houston author.
Watkins declined to speak to reporters afterward.
Her fate may have been different if Enron's problems had
stretched over time, she said.
``The company died so fast that they didn't have time to get
rid of me. That's probably true,'' she acknowledged.
She joked that the only good things on her resume were her
accounting degrees and her certified public accountant
license. Her last three employers were accounting firm
Andersen, Enron and a Metalgesellschaft AG subsidiary, all
of which suffered financial harm because of accounting
problems.
``I am 0-for-3. I think a company might be reluctant to hire
me since I seem to spell disaster,'' she said.
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