Sherron Watkins warned Enron chairman Kenneth Lay about the company’s accounting problems in 2001.
Watkins was an Enron vice president who became concerned about complex partnerships and accounting arrangements used to keep debt and losses away from the company’s reported balance sheet. In an August 2001 memo, she questioned whether Enron might implode under the weight of its accounting practices.
Her warning came months before Enron filed for bankruptcy in December 2001. The collapse became one of the defining corporate scandals in United States history and helped prompt the Sarbanes–Oxley Act of 2002.
Watkins is often grouped with Cynthia Cooper of WorldCom and Coleen Rowley of the FBI as a prominent corporate or institutional whistleblower. Unlike Cooper, who uncovered accounting fraud internally at WorldCom, Watkins raised concerns about Enron’s financial structures before the company’s collapse.