Enron whistleblower tells of 'crooked company'

She went to Lay following Skilling’s resignation in mid-August 2001 and after the company founder encouraged all employees to come forward with concerns. First she sent an anonymous memo, then identified herself as the author and met privately with Lay.

“I am incredibly nervous we will implode in a wave of accounting scandals,” she said, reading Wednesday from the memo hailed later by Congress as prescient. She also read that the business world in retrospect would consider Enron’s considerable successes “as nothing more than an accounting hoax.”

She said Lay winced when her memo quoted an unnamed colleague who told her “I wish we would get caught. We’re such a crooked company.”

That message, she said, “slapped him in the face more than anything else.”

She said she did most of the talking. Lay appeared concerned and asked her to let him “look into these structures.”

She said she learned later that he ignored her advice to hire outside accounting and law firms other than those Enron already used — Andersen and Vinson & Elkins — to investigate her concerns. Both had signed off on the Raptors when they were created. Vinson & Elkins found no reason for concern other than a public relations risk.

Watkins said Vinson & Elkins lawyers lied when they claimed to have examined the accounting because “they did not investigate the accounting at all” in her opinion, given their conclusion.

Watkins also quickly said, “Not anymore,” when Lewis questioned whether she believed Vinson & Elkins was among the nation’s pre-eminent law firms.

She acknowledged to Lewis that she didn’t know how the Raptors were created or what approvals they had received. He tried to establish that stock sales prompted by her discoveries about the vehicles couldn’t be improper if the entities weren’t, but she insisted her trades were based on information she had that the market did not.

Ben Glisan Jr., former Enron treasurer and chief architect of the Raptors, pleaded guilty in September 2003 to conspiracy for developing the entities to help manipulate Enron’s books. He is serving a five-year prison sentence, and prosecutors said Wednesday he is expected to testify against Lay and Skilling next week.

Watkins has been publicly critical of Skilling. Her memo to Lay said he had to have known what was coming for Enron to resign so unexpectedly from a “dream job” he’d sought for a decade. She acknowledged Wednesday that she had never discussed such issues with Skilling.

She said she has some speeches lined up for next month, and in such talks has called Fastow an assassin under orders from Skilling.

“If this jury were to acquit, your source of income would dry up, wouldn’t it?” Skilling lawyer Ron Woods asked.

“I would still be hired to talk about the leadership failures of Enron,” she replied. “It’s not relevant to me at all if they are convicted in this court.”

Watkins said her job prospects outside Enron seemed bright until Enron came under fire in late 2001. She learned in February 2002 that the company sought legal advice on the consequences of firing her two days after her meeting with Lay.

“It was very shocking,” she testified.

Watkins remained employed by Enron until November 2002, almost a year after the company sought bankruptcy protection — and after she had begun giving speeches.

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