The day after Jeff Skilling resigned; Sherron Watkins spent two hours in her office typing an anonymous letter to Ken Lay, laying out her concerns over what she had found in examining Enron's books:

"Dear Mr. Lay,

Has Enron become a risky place to work? For those of us who didn't get rich over the last few years, can we afford to stay? Skilling's abrupt departure will raise suspicions of accounting improprieties and valuation issues.

She went on to ask "how do we fix the Raptor and Condor deals?" and went on to say "I am incredibly nervous that we will implode in a wave of accounting scandals. My eight years of Enron work history will be worth nothing on my resume, the businesses world will consider the past success as nothing but an elaborate accounting hoax.

She had her assistant drop the unsigned letter in a special box for questions to Lay at the upcoming employee meeting, to be held at the Hyatt. She didn't have it in her to remain anonymous. when Lay didn't address her issues at the meeting, she went to Cindy Olson, head of human resources, and identified herself as the letter writer. She agreed to speak to Ken Lay face to face.

Before the August 22, 2001 meeting, she expanded her letter to 7 pages, offering fresh details, naming executives who could back up her charges, and even offering Lay advice on how to manage the problem.

Watkins arrived at Lay's office on the fiftieth floor for her 1 P.M. meeting. As Watkins made her case to Lay, he listened attentively. None of this should have come as a surprise; Lay approved many of the deals. Still, he seemed surprised and concerned by what he heard.

Lay made arrangements to have Watkins allegations investigated by an outside law firm -- Vinson and Elkins. V&E had done legal work on some of the same transactions she was complaining about.

After a very narrow investigation, V&E basically whitewashed the whole thing.

Ken Lay had subordinates investigate the possibility of firing Watkins, but concluded getting rid of her wouldn't be smart. It would invite an ugly lawsuit, and draw attention to Enron's books.

Andy Fastow was not nearly as circumspect. He attempted to have her fired and her laptop confiscated.