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Unformatted text preview: SHERRON WATKINS—REVELATIONS OF A LETTER Who Is Sherron Watkins? Sherron Watkins gained fame as the so-called “whistle-blower” in the Enron accounting scandal. “Enron hid billions of dollars in debts and operating losses inside private partnerships and dizzyingly complex accousnting schemes that were intended to pump up the buzz about the company and support its inflated stock price.” Watkins wrote two letters, one anonymously, to Enron‟s chairman, Kenneth Lay. In those letters she “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 had a “flair for numbers” and the training and expertise to recognize a “funny accounting scheme.” She received an accounting degree from the University of Texas at Austin in 1981 and a master‟s degree in accounting in 1982, after which she went to work for Arthur Andersen‟s Houston office. Watkins transferred to Andersen‟s New York City office and then subsequently returned to Houston in the early 1990s to work for Enron. Eight years after joining Enron, Watkins had risen to the position of vice president for corporate development. According to one retrospective account of the Enron scandal, Watkins “understood that something very bad was going on, something everyone else seemed to think was perfectly okay, and that public revelation would be disastrous.” Somehow Watkins “was able to escape the groupthink that ensnared her colleagues.” Nonetheless, she worried about the future—apparently both Enron‟s and her own. As she wrote in a six-page letter to Ken Lay, “I am incredibly nervous that we will implode in a wave of accounting scandals. My eight years of Enron work history will be worth nothing on my résumé, the business world will consider the past successes as nothing but an elaborate accounting hoax. Skilling is resigning now for „personal reasons‟ but I would think that he wasn‟t having fun, looked down the road and knew this stuff was unfixable and would rather abandon ship now than resign in shame in two years.” The Events Leading up to Watkins’ Instant Fame During the summer of 2001, Sherron Watkins worked for then-chief financial officer Andrew Fastow, looking for assets to sell as Enron ran into financial trouble. She repeatedly uncovered “off-the-books arrangements that no one could explain or seemed to want to investigate.” She was uncomfortable approaching Fastow or then-CEO Jeffrey Skilling, not trusting either one. Fastow himself played a major role in the off-the-books partnerships she kept encountering. Watkins also knew that other executives who questioned such transactions had encountered Skilling‟s wrath, and she feared being fired if she approached Skilling directly. Consequently, Watkins debated for weeks regarding the course of action to take....
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- Spring '11