1. Initial news stories of Sherron Watkins’ actions at Enron and her reaction to the media frenzy that followed. 

The Woman Who Saw Red; Enron Whistle-Blower Sherron Watkins Warned of the Trouble to Come

   by Jennifer Frey, January 25, 2002

HOUSTON, Jan. 25 —  When she woke up on Monday morning, Jan. 14, Sherron Watkins was just one of the legions of high-powered executive moms, the kind of woman who drove an SUV, who liked to take her 2-1/2-year-old daughter to preschool on the way to the office, who caught up with her sister by cell phone during her morning commute. At age 42, Watkins had climbed to the rank of vice president at Enron, she owned a lovely home in an upper-class Houston neighborhood, and she finally had the family she’d so long desired.

     Twenty-four hours later, she was the so-called “whistle-blower” in one of the biggest corporate scandals in modern memory, the woman who had warned Enron’s now-former chairman, Kenneth Lay, of major irregularities in the company’s accounting practices months before the corporation collapsed, embroiled in a major Securities and Exchange Commission investigation.  “I am incredibly nervous,” she wrote in that now-infamous six-page memo, “that we will implode in a wave of accounting scandals.”
       That memo, which she personally gave to Lay in a meeting on Aug. 22, was discovered in a box of documents seized by investigators at Enron headquarters. It was released, in its entirety, on Jan. 15. And Watkins found herself cast as the hero in the Enron scandal: Suddenly, she was the tough-talking Texas woman who had stood up to all the good old boys in the corporate hierarchy, the men who had been making millions while their employees and shareholders watched some, or all, of their life savings evaporate.  And Watkins was in no way prepared for what that meant.   
See complete article here.  


Author of Letter To Enron Chief Is Called Tough


Published: Wednesday, January 16, 2002

     In the cutthroat business culture of the Enron Corporation, where toughness and a sharp tongue were often prerequisites for success, Sherron S. Watkins could be noticeably tough and sharp.   One former colleague described her as ''a bull in the china shop'' at times.  Others mistook the Texan Ms. Watkins for a brusque New Yorker. But several former colleagues agreed that her toughness was rooted in a strong sense of business ethics and that she was unafraid to deliver difficult news, even to her superiors.

     ''In my experience, she was not afraid to speak the truth, even when it was uncomfortable,'' said Stephen Schwarz, a former Enron employee who worked with Ms. Watkins and described her as ''the consummate professional.''

     Ms. Watkins, a vice president for corporate development at Enron, has emerged as a central figure in the federal investigations into the company, after a Congressional subcommittee released a letter she sent in August to Kenneth L. Lay, Enron's chairman. [Text, Page C6.]

Written months before the company laid off more than 4,000 workers and filed for Chapter 11 bankruptcy protection in December, the letter warned that improper accounting practices threatened to destroy the company even as Mr. Lay was reassuring investors and employees.

    Read the whole article here.   Read the text of memos here.

Person of the Week: 'Enron Whistleblower' Sherron Watkins

By Frank Pellegrini, Friday, Jan. 18, 2002

We don't know much about Sherron Watkins. We haven't met her in our living rooms, on TV in front of a bank of microphones, not yet. But because she wrote a letter to her boss, we know she knew, about the "Condor" and "Raptor" partnerships and the accounting and the doom Enron was facing. We know that in August she told them — her boss, Ken Lay, and then her friend at Arthur Andersen, who then told Andersen's head Enron auditor, David Duncan, who's now telling Congress. And so we know that they all knew too.   Read whole article here.

By the Sign of the Crooked E

By Michael Duffy, Saturday, Jan. 19, 2002

You can smell the fish sticks from lunch in Sherron Watkins' 60-year-old house near downtown Houston, see the framed pictures of the family vacation and the baby in bunny ears and even one of her country-crooning second cousin, Lyle Lovett. Things have been so hectic, Watkins apologizes, that the Christmas ornaments haven't been put away yet. The daughter of two educators, Watkins grew up in nearby Tomball, where she worked the cash register at the family grocery store and began saving her money. By 1982, she'd picked up two accounting degrees in Austin and quickly found a job with Arthur Andersen. She eventually landed a job with Enron, Houston's red-hot energy trading firm, rising in eight years to vice president for corporate development. Her quick ascent surprised no one, says her husband Rick: "She always had a flair for numbers."

That flair led Watkins last summer to conclude there was something rotten at Enron. The numbers didn't add up. A pair of letters that she wrote to Chairman Kenneth Lay exposed top officials--perhaps including Lay himself--who for months had been trying to hide a mountain of debt, and started a chain reaction of events that brought down the company. Watkins' letters, along with thousands of other documents, are now in the hands of congressional and criminal investigators who are probing how Enron, its pet-rock auditors at Andersen and a host of other supporting actors allowed the country's seventh largest company to suddenly go bankrupt in December. "I am incredibly nervous that we will implode in a wave of accounting scandals," Watkins wrote of Enron's financial health. "I have heard one manager-level employee from the principal investments group say, 'I know it would be devastating to all of us, but I wish we would get caught. We're such a crooked company.'"

Maybe you can only glimpse the soul of a company when it breaks open right before your eyes. But we know now, thanks to Watkins, that Enron hid billions of dollars in debts and operating losses inside private partnerships and dizzyingly complex accounting schemes that were intended to pump up the buzz about the company and support its inflated stock price. We also learned last week that executives at Andersen, the accounting giant that enabled Enron's every move, fretted about the arrangement but saw the chance to double their fees if they just kept their heads down.

Read the whole article here.

The Enron Effect

As The Accounting Scandal Spreads, Regulators And Politicians Are Pounding The Table For Reform. But Will Anything Really Change?

By Allan Sloan and Michael Isikoff

From the magazine issue dated Jan 28, 2002

While politicians and theoreticians struggle with the idea of reform, real and immediate solutions to particular problems tend to come from people like Enron whistle-blower Sherron Smith Watkins, who warned Lay about accounting problems. Watkins, 42, who recently became a mother for the first time, has a highly developed moral sense and was incredibly courageous. But even having the right person in the right place blowing the whistle about the right thing won't change a place like Enron that didn't want to change.   Read the whole article here.