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Enron lawyers under fire
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January 16, 2002: 7:34 a.m. ET
Vinson & Elkins said Enron partnerships were 'creative and aggressive.'
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NEW YORK (CNN/Money) - A warning letter from a high-ranking Enron employee to the company's chairman, Kenneth Lay, initiated an investigation into its partnerships and accounting by a well-known and politically connected law firm -- yet the firm said only that the transactions were "creative and aggressive," according to a published report Wednesday.
The investigation conducted by the Houston-based Vinson & Elkins law firm into Enron's partnerships, such as LJM2 Co-Investment LP formed by the company's former chief investment officer, concluded that "no one has reason to believe that it is inappropriate from a technical standpoint," according to a report obtained by the Wall Street Journal.
The firm looked into the Enron's partnerships after a letter from the company's global finance executive, Sherron Watkins, warned that she was "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 resume, the business world will consider the past successes as nothing but an elaborate accounting hoax," according to the letter obtained by the Journal.
Click here for CNN/Money's coverage of the Enron collapse
In the letter, Watkins also warned Lay not to rely on Vinson & Elkins, citing a conflict of interest.
In looking into the transactions, Enron's general counsel and a former Vinson & Elkins partner, James Derrick, imposed two restraints on employees conducting the probe: don't second guess its accountants from Andersen and don't analyze every transaction, the paper reported.
In addition to being Enron's law firm of choice, Vinson & Elkins was also a major contributor to President Bush's 2000 campaign. Of the firm's 341 partners, 165 contributed about $204,000, according to the Journal, citing a firm partner and friend of President Bush, Thomas Marinis Jr.
A spokesman for Vinson & Elkins said neither the Securities and Exchange Commission nor the congressional committees investigating Enron's collapse have contacted the firm, but it has hired Washington-based Williams & Connolly as its outside counsel and Houston-based attorney Joe Jamail to handle any civil litigation, according to the paper. 
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