Whistleblower, Enron Employees Hear Verdict
MELISSA BLOCK, host:
Sherron Watkins became known as the Enron whistleblower. She is the company's former Vice President of Corporate Development, who laid out her concerns about the company's financial misdeeds in an email to Kenneth Lay back in 2001. I asked her for her reaction to today's verdict.
Ms. SHERRON WATKINS (Former Vice President for Corporate Development, Enron): It was not surprising. I think the government had a very good case, particularly when Rick Causey, the chief accounting officer, entered into a plea agreement on the eve of the trial. And that let the government sort of keep it simple. They could really look at what evidence did these executives have that the company was not in good health, versus what did they tell the public? What did they tell investors?
BLOCK: I want to take you back to 2001. I've been looking at the famous memo that you sent to Kenneth Lay, where you talked about your deep concerns about the mess that Enron was in. You said, "I'm incredibly nervous that we will implode in a wave of accounting scandals. The business world will consider the past successes as nothing but an elaborate accounting hoax."
And you were talking to him, or emailing him in this memo, things that maybe the company could do. And one of them, you said, develop cleanup plan. Best case, cleanup quietly, if possible. And that made me wonder there was a point at which you thought maybe we can make this go away. Maybe there's a way that internally we can clean house.
Ms. WATKINS: Not really. I think, I haven't looked at that memo in a while, but I think I said, you know, sort of best case/worst case, but I said that more than likely with Skilling's departure, a lot of people would be looking for a smoking gun and so the quiet case was not really something you should probably pursue, was what my between-the-lines comments were. I think sometimes if you're just too much of a Cassandra, they'll throw your warnings in the trash.
BLOCK: Can you imagine something that Kenneth Lay could have done differently at that point? Jeffrey Skilling's left, he comes back. What might he have done?
Ms. WATKINS: Well, when there are rumors circulating, they kind of assume the worst and I think had Ken Lay come clean with, we have found a major problem. You know, we are dismissing the following executives. We've got this plan in place, we've quantified it, we've restated, there wouldn't have been such crazy speculation.
And I think so many creditors were on the hook, there was a very small probability they might have tried to really help shore up the company's finances so Enron could have stayed alive. Now I say it's very small because, unbeknownst to a lot of us, the company was horribly overleveraged so, you know, if I were to put probabilities on it, I think my warnings were too little too late and the company couldn't have been saved anyway.
But I do think if Ken Lay had heeded my warnings and not tried to paint such a positive glow over Enron from his comments, he wouldn't be facing prison time right now.
BLOCK: When you took the stand to testify in the Enron trial, one thing that came up was the fact that you had sold your own stock in Enron in 2001 and you said on the stand that you had more information than the marketplace did, that that sale was not exactly proper. But you were not charged with insider trading.
Ms. WATKINS: That's right.
BLOCK: Why is that?
Ms. WATKINS: Well, I don't know. I think part of it is because I wasn't making, you know, public statements to the contrary. That I was a vice president of Enron, but not in the management circles of the company. You know, I wish I wouldn't have sold. I usually get a little grief because I did, because I knew there were questionable accounting practices in place and, you know, the people who I sold to did not. But I can't, you know, I can't get my head into the government's head as to why they charged some people and why not others.
BLOCK: Ms. Watkins, how do you feel about the prospect of Jeffrey Skilling and Kenneth Lay possibly spending the rest of their lives in jail?
Ms. WATKINS: Well, it's sad but I think it's sad in the sense that I don't think either gentleman really takes responsibility for their role in Enron's demise. So they go to prison sort of bitter, angry, resentful men not understanding what they might have done wrong. As Ken Lay has said, in biblical terms, that he considers himself to be like Job, you know, a righteous man unjustly penalized.
BLOCK: Sherron Watkins, thanks very much for talking with us.
Ms. WATKINS: Okay, thank you.
BLOCK: Sherron Watkins is a former vice president at Enron who helped uncover the company's accounting practices. She spoke with us from Houston. There's a timeline of Enron's collapse and a summary of prosecution and defense arguments in the trial at NPR.org.