Enron – A Few Good Guys

Sherron Watkins:

Sherron Watkins

Sherron Watkins

Sherron Watkins is the former Vice President of Enron Corporation who alerted then-CEO Ken Lay in August 2001 to accounting irregularities within the company, warning him that Enron ‘might implode in a wave of accounting scandals. From her website:

At the House Hearing on Enron, Sherron Watkins said:
“I wish we could get caught. We are such a crooked company.” Sherron Watkins former Vice President of Corporate Development at Enron

In the emails made public, what can we find about Sherron Watkins? Unfortunately, not as much as we might hope.

There is no entry like “Watkin” in the table: employeelist. Again, like other senior executives, there are not many emails from or to Sherron Watkins.

In the entire email set, where the sender or receiver is sherron.watkins@enron.com, there are only 24 unique messages. If a group by is done on the sender and receiver, there are only 46 unique messages.

So, does this indicate:
– Sherron Watkins did not email much
– her assistants did her email for her
– the email list has been overly sanitized
– or something else?

If we search the body of the messsages, we find Sherron Watkins in emails that she sent, that others then forwarded along. So, I would tend to think that the email list is a very small subset of actual email data. What we do find is rather interesting.

Sherron’s Resentment In The Behavior Of Others:  

“I resent all these late comers joining the band wagon”

| 2001-10-24 17:09:03 | cindy.olson@enron.com | kenneth.lay@enron.com | Ken per my voice mail……thanks. —–Original Message—–From: =09Watkins, Sherron =20Sent:=09Wednesday, October 24, 2001 4:14 PMTo:=09Olson, CindySubject:=09FW: Your new CFO spot and the job I wantCindy, I sent this to Jeff McMahon today.  I wanted you to see it.  You can= forward it to Ken if you d like – I am very interested in speaking with hi=m as soon as that can be arranged.  I very much appreciate your insightful =and professional support of me in all of this from day one!  Thanks, Sherro=n. —–Original Message—–From: =09Watkins, Sherron =20Sent:=09Wednesday, October 24, 2001 4:12 PMTo:=09McMahon, JeffreySubject:=09Your new CFO spot and the job I wantJeff, Congratulations, you deserve the job and can do it superbly!  You kno=w you will need to replace Ben Gilson as Treasurer – possibly with Bill Bro=wn. =20My issue, and I feel very strongly about this, is that I want to be on the =crisis management team to determine how we save our trading franchise.  It =can disappear over night and I believe there s more bad news coming re: the=se raptor deals (ie, restatement).  I have clearly proven myself to be the =only person at Enron that had the character, at great risk to my own career=, much less personal risk, to go to Ken Lay and let him know what was going= on here.  I resent all these late comers joining the band wagon – it s dam=n easy to make a statement now, when Ken has made the hard decision to unwi=nd these deals and write them off.  Mainly I resent being stuffed into a ho=lding tank, I should not be the pariah here!  Despite your comment to me se=veral weeks ago when I told you that s how I felt and you replied “what did= you expect?”  I have been professional in this 100%, I went to Ken and Ken= alone, in contrast to yesterday s VP Jim S. who put Ken on the spot by ask=ing unanswerable questions at the all employee meeting. I hope to meet with= Ken Lay soon.  But I d like to talk to you about my role in the  inner cir=cle , because I firmly believe I deserve it and have proven so by my past e=valuations of the negative impact of these structures and then by my action=s in doing something about it.  You can help me with your endorsement of me= to Greg Whalley, Mark Frevert and Ken Lay.  I hope I have it.  Thanks and =good luck in the new job, Sherron —–Original Message—–From: =09Enron Announcements/Corp/Enron@ENRON   On Behalf Of Ken Lay- Chair=man of the Board@ENRONSent:=09Wednesday, October 24, 2001 3:50 PMTo:=09All Enron Worldwide@ENRONSubject:=09Jeff McMahon Named CFOToday we announced the appointment of Jeff McMahon as Enron s chief financi=al officer.  In my continued discussions with the financial community yeste=rday and today, it became clear that this move was required to restore inve=stor confidence.  Jeff has unparalleled qualifications and a deep and thoro=ugh understanding of Enron.  He is already on the job and hard at work on t=he issues before us.  Andy Fastow will be on a leave of absence from the co=mpany. =20Jeff had been serving as chairman and CEO of Enron Industrial Markets. He j=oined Enron in 1994 and spent three years in the London office as chief fin=ancial officer for Enron s European operations.  Upon returning to the U.S.=, Jeff was executive vice president of finance and treasurer for Enron Corp=.  In 2000, he was named president and chief operating officer of Enron Net= Works.I know all of you are concerned about the continuing decline in our share p=rice.  I am too, and we are working very hard to turn it around.  Appointin=g Jeff as CFO is one important step in that process.  But most of the solut=ion involves just continuing to do our jobs with excellence.  The fundament=als of our business are strong, and I think the market will begin to see th=at as we continue to perform.Please join me in giving Jeff your full support, and thank you for all of y=our continued hard work. |


“All that we have done is unwind the raptor entities, LJM still exists …”

| 2001-10-25 09:46:28 | mark.koenig@enron.com | j..kean@enron.com       | FYI.  I am definitely not responding to this —–Original Message—–From:     Watkins, Sherron  Sent:    Thursday, October 25, 2001 11:30 AMTo:    Koenig, Mark; Palmer, Mark A. (PR)Cc:    McMahon, JeffreySubject:    Erroneous press Mark, I m sure you are aware of the comments in the press that I have copied and inserted here below.  There have been others that are similar.  Basically, the press is reporting that we have dissolved the LJM partnerships, ended all relationships with the LJM entities, etc.  All that we have done is unwind the raptor entities, LJM still exists, all other transactions with LJM still exist, it s just that Andy sold his interest in the partnerships.  Michael Kopper owns them and would probably be considered a “friend of Enron” by investors/journalists.I m concerned about our efforts to build back investor confidence – do we correct the press?  how do we address this?  I m concerned that we will once again be hit with credibility concerns when the press or investors fully understand that LJM still exists and we have deals still pending with it and have deals still in place with it.  How do we correct this erroneous press?   Sherron WatkinsExcerpts:”Enron  has been under fire since last week as questions have surfaced about its accounting practices, especially in regard to two limited partnerships created by Fastow in 1999 and since dissolved. ….” By Lisa Sanders , CBS.MarketWatch.comLast Update: 10:05 AM ET Oct. 25, 2001″…So Fastow, in June, resigned his roles at the partnerships and Enron also ended its relationships with the LJM entities.” Houston Chronicle article from today.Sherron S. Watkins Vice President, Enron Corp.713-345-8799 office713-416-0620 cell |


“Please search your files and collect all records … relating to … LJM1, LJM2, JEDI, CHEWCO, RAPTOR ENTITIES, OSPREY, BLUE DOG …”

| 2002-01-29 08:49:50 | team.response@enron.com | k..heathman@enron.com   | We remain in the process of gathering information sought by various governm=ental agencies.Please search your files and collect all records and documents covered by o=r relevant to the following requests:(1)=09All records relating to any investigations/review of the allegations =raised by Sherron Watkins in her August memo to Ken Lay, including but not =limited to:(A) =09=09The review conducted by V&E in relation to which you were intervi=ewed.(B)=09=09Any review conducted by AA.(C) =09Any relevant internal Enron review.(2)=09All records from investment bankers or other financial advisors,  oth=er than AA,  regarding the structuring, financing or accounting relating to= Enron s SPEs, subsidiaries, and/or partnerships including but not limited =to LJM1, LJM2, JEDI, CHEWCO, RAPTOR ENTITIES, OSPREY, BLUE DOG, and their s=ubsidiaries.In the context of the above requests, “records” includes, whether in electr=onic or hard copy form, all and any emails or regular mail/memoranda you ma=y have sent or received, notes you may have made, documents (including draf=ts) on shared/hard drives, meeting notes or minutes or actual opinions/advi=ce from any of the above sources.  A full definition provided by the govern=ment is attached hereto.If you discover any records/documents, or if you have any questions, please= contact the RAP TEAM at responseteam@enron.com or ext. x5-3723.  =20We appreciate that you may have received what appear to be similar requests= in relation to other governmental lines of inquiry but it is very importan=t that we respond, and are seen to respond, to each governmental request as= specifically, fully and promptly as possible.Thank you in advance for your continuing assistance in this matter.Regards,RAP TEAM=09ATTACHMENT1.=09The term “records” is to be construed in the broadest sense and shall =mean any written or graphic material, however produced or reproduced, of an=y kind or description, consisting of the original and any non-identical cop=y (whether different from the origianl because of notes made on or attached= to such copy or otherwise); and drafts and both sides thereof, whether pri=nted or recorded electronically or magnetically or stored in any type of da=ta bank, including, but not limited to, the following:  correspondence, mem=oranda, records, summaries of personal conversations or interviews, minutes= or records of meetings or drafts, contracts, agreements, puchase orders, i=nvoices, confirmations, telegraphs, telexes, agendas, books, notes, pamplet=s, periodicals, reports, studies, evaluations, opinions, logs, diaries, des=k calendars, appointment books, tape recordings, video recordings, e-mails,= voice mails, computer tapes, or other computer stored matter, magnetic tap=es, microfilm, microfiche, punch cards, all other records kept by electroni=c, photographic, or mechanical means, charts, photographs, notebooks, drawi=ngs, plans, inter-office communications, intra-office and intra-departmenta=l communications, transcripts, checks and canceled checks, bank statements,= ledgers, books, records or statements of accounts, and papers and things s=imilar to any of the foregoing, however denominated.2.=09The terms “relating,” “relate,” or “regarding” as to any given subject= means anything that consitutes, contains, embodies, identifies, deals with=, or is in any manner whatsoever pertinent to that subject, including but not limited to records concerning the preparation of other records. |


What Did The Techs Say?

“Our analyses yield figures which are substantially at variance … we found some irregularities in the data …”

| 2001-12-14 20:53:43 | Hello Rakesh and Gwen,  I am sorry that I have been out of pocket all week and did not have access to my e-mail.  I have just returned from NY and want to thank you for all of your hard work in helping us track the data.  You and your team have been extremely responsive in trying to get the information that we need.   I apologize for making numerous requests but everything that you have provided us will be useful to SSB.   SSB has been provided with some information.  They will be incorporating the information that you have provided as well as information from the traders in their board presentations.  At this stage, I believe that we have done all that we can.  If I hear something further, I will let you know on Monday. Again, thank you very much for all of your help. Jayshree Desai3-3290

—–Original Message—– From: Bharati, Rakesh Sent: Fri 12/14/2001 1:07 PM To: Taylor, Sarah Cc: Kaminski, Vince J; Shanbhogue, Vasant; Desai, Jayshree; Donahue, Jeff Subject: Power and Gas TradingSarah, As I have not yet heard from Jayshree, I thought I would convey the gist of our phone conversation by e-mail.  Over the last several days, we in the research group have looked at ORACLE risk management databases and Enrononline data to corroborate the profitability numbers for power and gas trading.  Our analyses yield figures which are substantially at variance with what is normally believed to be the case.  Of course, there may well be information sources we are not privy to.  Moreover, we found some irregularities in the data which only serve to raise our doubts about the quality of the data.As a result, we are not able to make an authoritative statement about the profitability of power and gas units. As we are not able to intepret the data ourselves, we have provided the spreadsheets so you can draw your own conclusions.  Thanks.Rakesh Bharati Phone: (713) 853-0936 Fax:     (713) 646-2503  |


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