Washington ? Enron executive Sherron Watkins warned Chairman Kenneth Lay on Oct. 30 that “We need to come clean” and disclose the heavy financial losses from the company’s complex web of partnerships.

Watkins’ warning came a little more than a week before the company reported the huge losses, which prompted an investigation by federal regulators.

Within a month, the big energy-trading company collapsed into bankruptcy.

Watkins’ memo outlining her appeal to Lay was released Wednesday by the House Energy and Commerce Committee, which is investigating Enron.

Today, Watkins is to testify before an investigative subcommittee of the panel about her efforts to bring the company’s accounting problems to light.

Lay has refused to testify before Congress, invoking his Fifth Amendment privilege against self-incrimination.

Watkins first alerted Lay in August to potential “accounting scandals.”

In the memo she gave Lay in October, Watkins said Lay should “admit that he trusted the wrong people.”

“He relied on … Skilling, as well as … Fastow and … Causey to manage the details,” Watkins wrote.

Jeffrey Skilling was Lay’s handpicked successor for chief executive officer, Andrew Fastow was the chief financial officer who ran the partnerships, and Rick Causey was the chief accounting officer.

In her Oct. 30 meeting with Lay, Watkins told investigators, the chairman promised her he would fire longtime auditor Arthur Andersen and the Vinson & Elkins law firm. Lay reversed himself the next day, telling Watkins a special committee would be established within the company to investigate.

Watkins told investigators in a four-hour meeting Wednesday “how her efforts to raise red flags were ignored,” said Ken Johnson, spokesman for the House Energy and Commerce Committee. Watkins said “she literally was shocked to learn that nobody seemed to care,” according to Johnson.

Fastow and Causey invoked their constitutional right and refused to answer lawmakers’ questions last Thursday.

Federal regulators, meanwhile, ordered a nationwide investigation into wholesale power and natural gas markets Wednesday, focusing on whether manipulation by Enron or other energy traders caused soaring prices in the West a year ago.

Pat Wood, chairman of the Federal Energy Regulatory Commission, said that the agency would conduct “a full-bore investigation” of both physical energy transactions and financial trades such as those dominated by Enron’s online trading division before the company sank toward bankruptcy.

Wood said that the investigation could take as long as six months and, while focusing on trading activities of Enron, would include wholesale gas and power trades of other energy companies as well.