WASHINGTON (AP) Enron Corp. executive Sherron Watkins accused two top company officials yesterday of duping then-Chairman Kenneth Lay and the board of directors about improper and possibly illegal partnerships that concealed over $1 billion in debt.

Paul Wong
Enron Corp. executive Sherron Watkins, accompanied by her attorney Philip Hilder, testifies on Capitol Hil before the House Energy and Commerce subcommitte.<br><br>AP PHOTO

Watkins said that when she told Lay of her concerns, the chief financial officer, Andrew Fastow, wanted her fired and her computer seized.

Chief Executive Officer Jeffrey Skilling, Fastow and other executives “did dupe Ken Lay and the board,” she testified at a hearing of the House Energy and Commerce investigative subcommittee.

“There were swindlers in the emperor”s new clothes discussing the fine material that they were weaving,” said Watkins. “And I think Mr. Skilling and Mr. Fastow are highly intimidating, very smart individuals and I think they intimidated a number of people into accepting” questionable structures for the partnerships.

Self-assured as she answered lawmakers” questions, Watkins spoke clearly and in detail and smiled when lawmakers praised her for sticking her neck out to the energy-trading company”s top official.

Rep. John Dingell (D-Mich.) called Watkins “an extraordinary and courageous woman” and a “bright spot” in a company where executives turned a blind eye to abuses.

Skilling”s attorney, Bruce Hiler, disputed Watkins” statements. “Everything she said about my client is based either on hearsay, rumor or opinion,” he said. “She did not talk to my client. She has no basis in fact for her views.”

Watkins testified she was told last summer by an Enron personnel executive that Fastow chief architect of the complex partnerships that eventually brought the company down wanted her to be terminated for taking her concerns to Lay.

“I was not comfortable confronting Mr. Fastow with my concerns,” Watkins said. “To do so, I believed, would have been a job-terminating move.”

Watkins also placed blame on Enron”s auditor, Arthur Andersen where she had worked for eight years before going to Enron and Vinson & Elkins, a law firm representing Enron.

Asked whether she believed Andersen was culpable in Enron”s collapse, she replied, “I think so because they”re charged with auditing the results.”

Watkins said she did not go to the Securities and Exchange Commission or other federal agencies with her concerns about Enron”s financial practices because “I didn”t want to hasten our demise.”

She said Lay had asked her if she went outside the company with her concerns. When she said no, Lay asked her for time to investigate, Watkins testified.

She spoke as Enron announced from Houston that two top Enron executives at the center of the drama, accused of failing to help control the partnerships, were fired. Chief accounting officer Rick Causey was among those named by Watkins as mistakenly trusted by Lay “to manage the details.”

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