- Cape man gets 8 years for robbery, his first offense (12/7/16)9
- 3 students in custody for violent threat; no details released (12/9/16)15
- Abuse suspect tries to take cop's gun; officer zaps him with Taser and punches his face (12/7/16)3
- Group seeks to create a neighborhood park on Cape Girardeau's south side (12/7/16)14
- Man sentenced to 103 years for murder of Cape woman (12/6/16)4
- Cape may allow residents to keep chickens; residents at meeting push for measure (12/6/16)34
- Poplar Bluff man accused of enticement, child porn in Scott County sting operation (12/4/16)
- Burglary suspect apprehended inside Jackson garage (12/4/16)
- Company to start recruiting businesses to Jackson, Cape (12/9/16)14
- 13 venues, 60 sponsors participating in Happy Slapowitz's Toy Bash on Thursday (12/7/16)2
Enron exec says Fastow wanted her fired for going to chairman
AP Business WriterWASHINGTON (AP) -- Enron Corp. executive Sherron Watkins accused two top company officials Thursday of duping then-Chairman Kenneth Lay and the board of directors about improper -- and possibly illegal -- partnerships that concealed over $1 billion in debt.
Watkins said that when she told Lay of her concerns, the chief financial officer, Andrew Fastow, wanted her fired and her computer seized.
Chief Executive Officer Jeffrey Skilling, Fastow and other executives "did dupe Ken Lay and the board," she said.
"Mr. Skilling and Mr. Fastow are highly intimidating," said Watkins. "I think they intimidated a number of people into accepting" the partnerships.
Watkins testified she was told last summer by an Enron personnel executive that Fastow -- chief architect of the complex partnerships that eventually brought the company down -- wanted her to be terminated for taking her concerns to Lay.
"I was not comfortable confronting ... Mr. Fastow with my concerns," Watkins told the House Energy and Commerce investigative subcommittee. "To do so, I believed, would have been a job-terminating move."
Under questioning, Watkins also placed blame on Enron's auditor, Arthur Andersen, and Vinson & Elkins, a law firm representing Enron.
Self-assured as she answered lawmakers' questions, Watkins said she told Lay in August that an entity involved with the partnerships, known as "Raptor," owed Enron more than $700 million and urged Lay "to find out who lost that money."
Watkins said she continued to ask questions and seek answers from colleagues who may have known about the complex partnerships. "I never heard reassuring explanations," she said.
And, she said, when it appeared that Fastow was being considered for promotion to chief executive, she decided to go directly to Lay in hopes that the financial improprieties would be corrected.
After meeting with Lay on Aug. 22 and spelling out her concerns in detail, Watkins said, "Mr. Lay assured me that he would look into my concerns."
However, in response, Lay only asked Enron's law firm, Vinson & Elkins, to investigate the matter, Watkins said.
"I was highly alarmed by the information I was receiving," Watkins said.
Rep. John Dingell, D-Mich., called Watkins "an extraordinary and courageous woman" and a "bright spot" in a company where executives turned a blind eye to abuses.
Watkins warned Lay and several other executives that the company was engaging in "outright manipulations of Enron's income statements, booking fictitious income and hiding actual losses," said Rep. Jim Greenwood, R-Pa., the subcommittee chairman.
Watkins appeared before Congress as a willing and knowledgeable witness following a parade of top Enron officials who have refused to answer questions. She testified under a "friendly subpoena" because she is still an Enron employee.
"Ms. Watkins took her concerns right to the top," said Greenwood. He said she is "a loyal company employee, who sought valiantly and sadly, in vain, to get the people in charge to face the facts and make the hard choices needed to save the company."
Watkins said she also spoke with others inside and outside the company, including Jeffrey McMahon, then the Enron treasurer; Associate General Counsel Rex Rogers; Cindy Olson, vice president for human resources; Arthur Andersen auditor James Hecker and outside company attorney Joe Dilg.
Watkins told Lay she worried about the fate of the company and her own career as word spread in Enron's glass tower in Houston about financial improprieties that ultimately pushed the huge energy trading company into the biggest bankruptcy in U.S. history on Dec. 2.
Members of the House panel want to know whether Watkins was brushed off after she alerted Lay and others that the company was mired in dodgy accounting practices. Lay resigned Jan. 23. She questioned Enron's complex web of partnerships, run by executives who profited hugely from them, that kept hundreds of millions of dollars in debt off the company's balance sheet and hidden from investors and federal regulators.
Watkins, 42, is a vice president for corporate development at Enron.
Months after her initial plea to Lay, when Enron was crumbling as she had predicted, Watkins again warned him. She told Lay on Oct. 30 that "we need to come clean" and disclose the heavy financial losses from the partnerships.
She also advised Lay on how to shift blame to others, naming Skilling, Fastow and chief accounting officer Rick Causey.
She wrote that Lay should "admit that he trusted the wrong people," that he relied on Skilling; his hand-picked successor, Fastow; and Causey "to manage the details."
Her warning came a little more than a week before Enron reported the huge losses, which prompted an inquiry by the Securities and Exchange Commission. The Justice Department is pursuing a criminal investigation as Congress presses a wide-ranging probe of Enron and its longtime auditor, the Arthur Andersen firm, which blessed Enron's accounting and whose employees destroyed numerous Enron-related documents sought by federal regulators.
Watkins' six-page memo dated Aug. 22, 2001, which she hand-delivered to Lay, was rich in detail about problems with the partnerships, with which she was familiar. She warned that the company could "implode in a wave of accounting scandals" around the time Lay was telling employees that growth of the company "has never been more certain."
Lay has refused to testify before Congress, invoking his Fifth Amendment right against self-incrimination at a Senate hearing on Tuesday. Doing the same last Thursday were Fastow, who reaped at least $30 million from the partnerships. Causey and two other Enron officials also have taken the Fifth.
------On the Net:
Enron site: http://www.enron.com