Enron executive knew of company troubles

by H. Josef Hebert
The Associated Press

WASHINGTON – Enron executive Sherron Watkins said yesterday it was common knowledge at the company that partnerships were used improperly to hide debt and inflate profits but chairman Kenneth Lay was duped into acceptance and others were intimidated into silence.

Watkins, who wrote Lay a memo in August warning that Enron could collapse and later urged him to "come clean" to save the company, described a tense atmosphere in which few challenged top executives, especially Andrew Fastow, the architect of some of the partnership transactions.

"I did feel like a lone fish swimming upstream," Watkins told a House Energy and Commerce investigations subcommittee. She said she struggled last year to persuade Lay and other executives to fix the problems that would drive the company under.

In contrast to lawmakers' sharp, often skeptical comments during other Enron executives' appearances, Watkins was welcomed on Capitol Hill as a breath of fresh air amid the stench of the Enron case.

"You were the conscience of this corporation. You warned them. You are a hero," Rep. Edward Markey, D-Mass., told her.

Enron's bankruptcy last December was the largest corporate failure ever, throwing thousands of employees out of work, leaving their retirement accounts in shambles and causing investors around the country to lose billions of dollars as Enron stock became virtually worthless.