Washington — An Enron employee warned company Chairman Kenneth Lay last August that "we will implode in a wave of accounting scandals" unless the company halted practices that eventually sent it into bankruptcy, congressional investigators said Monday.
Two Republican congressmen, including the chairman of the House Energy and Commerce Committee, on Monday demanded all records relating to a review of the employee's allegations five months ago.
The unidentified Enron employee relayed her concerns in a letter to Lay and met with him for an hour to supply documentation, said Reps. Billy Tauzin of Louisiana, the committee chairman, and James Greenwood of Pennsylvania.
Around the time of the employee's warnings, Lay was telling Enron employees that growth of the energy company "has never been more certain."
"I am incredibly nervous that we will implode in a wave of accounting scandals," the employee warned Lay in the letter last August. A "veil of secrecy" surrounded Enron's partnerships, which were keeping huge amounts of Enron debt off the company's books, she said. The congressmen released excerpts from the letter.
"It sure looks to the layman on the street that we are hiding losses in a related company," the employee wrote. The woman worked in Enron's global finance division, said a House committee source who demanded anonymity.
She said several senior Enron employees "consistently and constantly" questioned the corporation's accounting methods to senior Enron officials, including CEO Jeffrey Skilling. Skilling resigned in August.
Lawmakers are likely to ask Lay about the employee's letter when he appears at two congressional hearings next month. Enron's Washington attorney, Robert Bennett, said Monday that Lay will testify Feb. 4 in his first appearance before Congress since the scandal broke.
Bennett could not be reached Monday night for comment on the letter.
Tauzin and Greenwood said senior Enron officials instructed the law firm of Vinson & Elkins to review the employee's allegations, but instructed the outside attorneys not to second-guess accounting advice and not to analyze the questioned transactions in detail.
The Vinson & Elkins review concluded that the concerns expressed by the Enron employee did not warrant further widespread investigation.
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