Enron warned of imploding situation

TUESDAY, JANUARY 15, 2002

The fall of Enron is looking more and more like the Department of Interior's trust fund debacle with the disclosure of an internal memo which warned Chairman Ken Lay of an imploding situation.

An Enron vice president, Sherron S. Watkins, wrote Lay in August and told him she feared the company would "implode in a wave of accounting scandals." She questioned the accounting practices of Enron's partners, and whether they were used to hide losses, an issue being investigated by government agencies and Congress.

Watkins letter was found in a box Enron gave to Congressional investigators.

In a related development, Arthur Andersen, whose accounting of the Enron has been questioned, said that it has a policy to destroy records. Andersen performed an accounting of the tribal trust for the Interior in the 90s and estimated that doing the same for the Individual Indian Money (IIM) trust would be costly and time-consuming.

Get the Story:
Enron Chief Got Early Warning (The Washington Post 1/15)
Andersen's Policy Was To Destroy Audit Papers (The Washington Post 1/15)
Enron's Chairman Received Warning About Accounting (The New York Times 1/15)
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Relevant Links:
Enron - http://www.enron.com/corp
Auditor Andersen's name in 'tatters' (1/14)