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Non-Tech : The ENRON Scandal -- Ignore unavailable to you. Want to Upgrade?

To: Mephisto who wrote (2856)	2/15/2002 2:28:12 PM
From: Mephisto	Read Replies (3) \| Respond to of 5185

Enron Whistleblower Feared for Job By MARCY GORDON, AP Business Writer WASHINGTON (AP) -When Enron Corp. executive Sherron Watkins warned then-chairman Kenneth Lay last summer that the company's financial house of cards was set to collapse, she was nervous about her job security. Later, she feared for her personal safety and locked up her files. Hailed as a hero by lawmakers during more than four hours of testimony before Congress on Thursday, Watkins drew a portrait of a company where rank-and-file employees were pumped up and loyal while Lay was duped by subordinates into acceptance of dodgy accounting. Other top executives were intimidated into silence, she said. Watkins said it was common knowledge in the financial division where she worked that a complex web of partnerships was used improperly to hide more than $1 billion in debt, inflate profits and buoy Enron's stock price. Still, few challenged top executives, especially former chief financial officer Andrew Fastow, the architect of some of the off-the-books partnership transactions, she told the House Energy and Commerce investigative subcommittee. A clique of executives profited hugely from the partnerships, including Fastow, who reaped at least $30 million. After the Houston-based energy-trading company's true financial condition became known last fall, it crumbled into the largest bankruptcy in U.S. history on Dec. 2, burning investors and stripping thousands of employees of their retirement savings in accounts loaded with Enron stock. Watkins, an accountant and vice president, said she believed Fastow and then-chief executive officer Jeffrey Skilling - along with Enron's accounting firm, Arthur Andersen, and its outside legal advisers - ``did dupe Ken Lay and the board.'' She called Skilling ``a very intense, hands-on manager'' and said she ``would find it hard to believe that he was not fully aware'' that the partnerships run by Fastow were largely financed by Enron stock, contrary to normal accounting practices. Skilling testified to the panel last week that he did not know details of certain transactions between Enron and one of the partnerships allegedly used by the company to hide debt. Watkins wrote Lay a scathing memo in August warning that Enron could collapse ``in a wave of accounting scandals.'' She told him that an entity involved with the partnerships, known as ``Raptor,'' owed Enron more than $700 million and she urged him ``to find out who lost that money.'' In two meetings in October, she urged Lay to ``come clean'' to save the company. When Fastow learned that she had brought her concerns to Lay, ``he wanted to have me fired; he wanted to seize my computer,'' Watkins said she was told by Cindy Olson, vice president for human resources. ``I think Mr. Skilling and Mr. Fastow are highly intimidating, very smart individuals and I think they intimidated a number of people into accepting'' questionable structures for the partnerships, Watkins testified. More recently, she said, fear for her personal safety and concern ``that Mr. Fastow might be vindictive'' led her to seek advice from Enron security personnel and secure her files in a lockbox. Skilling's attorney, Bruce Hiler, disputed Watkins' statement and accused her of scapegoating. ``Everything she said about my client is based either on hearsay, rumor or opinion,'' he said. ``She did not talk to my client. She has no basis in fact for her views.'' Lay and Fastow have asserted their Fifth Amendment right against self-incrimination and refused to answer questions. Said Lay's spokeswoman, Kelly Kimberly: ``Ken Lay believed that Ms. Watkins was sincere and credible when she raised her concerns in 2001. We are pleased that she stood up to a difficult situation.'' Fastow spokesman Gordon Andrew declined comment. Andersen spokesman Patrick Dorton said Watkins is ``well-intentioned'' but ``is not in a position to form judgments about Andersen simply because she was not present at the many meetings during which Andersen advised Enron's board, including Ken Lay, about the risks of the transactions Enron had developed.'' The Justice Department (news - web sites) and the Securities and Exchange Commission (news - web sites) are investigating Enron and Andersen's role in the accounting debacle. The Big Five accounting firm fired its lead Enron auditor for massive destruction of Enron-related documents. Watkins' account squared with testimony last week by former Enron attorney Jordan Mintz and Jeffrey McMahon, now the company's president and chief operating officer, who suggested that the close relationship between Skilling and Fastow was an obstacle to bringing the partnerships under control. Rep. Billy Tauzin, R-La., sizing up Watkins' testimony after the hearing, said she ``somewhat validated'' Lay's earlier assertions that he was kept in the dark by colleagues, while bolstering ``strongly'' the evidence that Skilling did not tell the truth when he testified last week. dailynews.yahoo.com - On the Web: Enron Corp. site: enron.com