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Enron Whistle-Blower: Chairman was Mislead

The vice president of Enron accused two top executives of deceiving former chairman Kenneth Lay about the company's questionable financial dealings. Enron whistle-blower Sherron Watkins testified Thursday before the House Energy and Commerce committee, which is investigating the largest bankruptcy in U.S. history.

Ms. Watkins said former Chief Operating Officer Jeffrey Skilling and former Chief Financial Officer Andrew Fastow fooled Mr. Lay about the deepening financial crisis at Enron. She noted the company's law firm and its auditor also are to blame. "I do believe that Mr. Skilling and Mr. Fastow, along with two very well-respected firms, did dupe Ken Lay and the board," she said.

An internal review blames Mr. Lay for failing to monitor the partnerships created by Mr. Fastow that ultimately led to the company's collapse.

According to Ms. Watkins, when she told Mr. Lay of her concerns, Mr. Fastow wanted her fired and her computer seized.

Ms. Watkins also disputed sworn testimony by Mr. Skilling last week in which he said he was not aware that the partnerships were aimed at hiding debt and inflating profit. She stressed she believed Mr. Skilling could foresee problems stemming from those arrangements. "From all the records and presentations that I have reviewed, Mr. Skilling was supposed to be an integral part of the controls and review process," she said.

Mr. Skilling's lawyer quickly dismissed Ms. Watkins' testimony, saying it is based on hearsay, rumor or her own opinion.

Lawmakers have expressed skepticism over Mr. Skilling's testimony, and have suggested he could face perjury charges.

Besides Congress, the Justice Department and the Securities and Exchange Commission are also probing Enron's collapse.