Was Sherron Watkins Really So Selfless?

Whistleblowers have none other than Sherron S. Watkins to thank for the new coat of armor Congress gave them in the new Sarbanes-Oxley law. That's ironic, given that the former Enron Corp. vice-president has never fit neatly into the whistleblower mold. Indeed, the woman made famous by her August, 2001, warning to Chairman Kenneth L. Lay is facing some revisionist criticism of her role at the company.

Watkins, 43, is getting heat for not taking her concerns about accounting and insider deals to regulators, the press, or even the company's board. As Lay attempted to investigate her claims, she was selling some $48,000 worth of stock--for tax and diversification reasons, her lawyer says. Journalist Robert Bryce, in his book Pipe Dreams: Greed, Ego and the Death of Enron, portrays her as an overeager climber looking to grab a more important job by getting Chief Financial Officer Andrew S. Fastow fired.

One company exec even notes that Watkins failed to raise any red flags in 1999 when she was trying to sell Enron's stake in a Caribbean power plant to an off-balance-sheet partnership run by Fastow. The deal ultimately fell through, but "not due to any lack of effort on her part," says the source. The partnerships later played a significant role in undermining investor confidence.

Watkins, who would speak only through her lawyer, Philip Hilder, insists she did not know the disturbing details that set off alarm bells for her until 2001. When she wrote her memo, she was simply trying to save Enron before it was too late. Says Hilder: "She acted entirely appropriately. She went to the management that she thought would rectify the problem in-house and did what a good employee should have done. It took moxie and courage."

However history judges Watkins' role in the Enron charade, her story directly influenced Congress as it considered whistleblower protections. The revelation that Enron considered firing Watkins once she revealed that she was the memo's author angered legislators. So they made sure to strengthen anti-retaliation protections in the law.

Watkins recently left her $165,000-a-year Enron job of her own accord when she found herself with little to do at the bankrupt company. But she leaves a big mark. Faced with Enron-like misconduct elsewhere, says a former Enron employee, "we'll be much more assertive. We'll not be intimidated." That's a legacy no revisionism can take away.

By Wendy Zellner in Dallas

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