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Watkins: Lay was deceived
graphic February 14, 2002: 6:16 p.m. ET

Whistle-blowing executive tells lawmakers she was 'highly alarmed' by info she got at Enron.
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  • Enron Corp.
  • Andersen
  • U.S. Department of Justice
  • Securities and Exchange Commission
  •  
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    NEW YORK (CNN/Money) - Congressional investigators hailed Enron Corp. executive Sherron Watkins as a heroine Thursday as she accused two top company officials of duping former Chairman Kenneth Lay about the company's risky accounting practices.

    Watkins told Congress she was "highly alarmed" by information she received about partnerships at Enron last year, and warned Lay that investors were being misled by inflated profit statements.

    The Enron vice president said a small group of others at the company shared her concerns about the off-the-books partnerships, but added that the corporate culture made it difficult to come forward at the Houston-based company, the nation's seventh-largest before it filed the biggest bankruptcy in U.S. history in December. Details

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      graphic CNN's Louise Schiavone takes a closer look at Watkins' testimony.

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    Lay was to appear before the same House Energy and Commerce investigative subcommittee Thursday, but lawmakers canceled his appearance after he invoked his Fifth Amendment right against self-incrimination at a Senate hearing earlier this week. Details

    In other Enron developments:

    Enron fired its Chief Accounting Officer Richard Causey and Chief Risk Officer Richard Buy. The bankrupt energy trader said the terminations were the result of a recent report from a committee of independent directors.

    Both Causey and Buy refused to testify at Congressional hearings last week, invoking their Fifth Amendment right against self-incrimination. Details

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    The director who led an internal investigation that was highly critical of  Enron's senior management has resigned after only three months in the position, as he indicated he would during congressional testimony a few days ago.

    William Powers, Jr., dean of the University of Texas School of Law, said in a statement that his primary responsibility was to the school and that he would remain available to testify on the Enron situation if his testimony was sought. Details

    Lay may have deliberately misled the public on two occasions to keep the company's problems under wraps, according to a published report citing Lay's comments to an internal investigative committee in January.

    Lay's remarks to an investigative panel on Jan. 16 suggest he was not up front about the resignation last August of then-CEO Skilling, and his lack of confidence in Fastow, in an October conference call with analysts and reporters, according to the Wall Street Journal.

    The report came a day after Lay appeared before the Senate Commerce Committee and expressed regret about what happened to the bankrupt energy company but declined to testify on the advice of his lawyer. Details

    A key lawmaker confirmed Wednesday that an international accounting group asked the now-collapsed Enron for a $500,000 donation last year.

    Paul Volcker, former Federal Reserve Chairman and current Chairman of the International Accounting Standards Board's trustees, asked Enron to donate $100,000 a year for five years, Sen. Carl Levin (D-Mich.) said.

    Enron, a large contributor to the Republican party and President George Bush, had considered making the donation in hopes of increasing its influence over the group, Levin said. Details

    The Securities and Exchange Commission is preparing rules that would speed up the disclosure of corporate insider trading and earnings, require critical accounting policies to be disclosed in annual reports, and tighten up other disclosure requirements.

    The changes are the result of the Enron scandal. Among other things, the SEC wants companies to file their 10K, or annual report, within 60 days of the end of their fiscal year instead of 90 days, and to file their quarterly statements within 30 days rather than 45 days. Details

    Lay and his wife have sold a house in Aspen, Colo., for $10 million, the highest price per square foot that area real estate agents can remember.

    The Lays have said they are struggling financially after the collapse of Enron, which cost thousands of the company's employees their jobs and many more their life savings, which was tied up in Enron stock in 401(k) plans. Details

    The U.S. Federal Energy Regulatory Commission is investigating whether Enron Corp. and other firms manipulated California's electricity market last year.

    FERC Chairman Pat Wood described the probe as a "fact-finding" measure to determine whether any energy company deliberately inflated prices for wholesale electricity or natural gas supplies to the nation's most populous state. Details graphic


    from staff and wire reports

      RELATED LINKS

    Enron Corp.

    Andersen

    U.S. Department of Justice

    Securities and Exchange Commission





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    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

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