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AMERICAN MORNING WITH PAULA ZAHN

Watkins, Skilling Face Off; Interview of Lowell Bergman

Aired February 26, 2002 - 09:19   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAHN, CNN ANCHOR: Now to a potential face-off this morning on Capitol Hill between two key Enron figures. Former CEO Jeffrey Skilling says he knew nothing about Enron's precarious financial situation. Company Vice President Sherron Watkins claims he did. Watkins and Skilling, the accuser and the accused, are both scheduled to be on the Senate hot seat in just about an hour from now, and they are going to be sitting very close together.

Correspondent Kate Snow joins us now with a preview from Capitol Hill. Not much daylight between those two folks expected to testify?

KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: No, they're -- and they're the two key witnesses that we are going to be looking at. There actually will be a third man at the table, also, Jeff McMahon, who is the current COO and president of Enron. The last time all three of these folks were here on Capitol Hill, Paula, they were over on the House side of the Hill, and they did not appear together, they all appeared separately. Today, a much different story. They actually are scheduled to start about 10 minutes from now, with the three of them sitting down at the same table.

Now, Jeffrey Skilling, the former CEO of Enron, who left the company last August, he first testified on February 7th, as you see here. Now, he was the highest-ranking Enron official to actually speak out loud. Most of them took the Fifth. He told that committee he didn't know much about Enron outside partnerships. He also explained that he left the company last August for personal reasons.

Now, that testimony did not mesh very well with what Sherron Watkins told the committee. She appeared just one week later before that same panel, and she is the one, of course, who wrote that whistle-blower memo, now famous memo, last summer to Ken Lay expressing some concerns about potential accounting problems at Enron.

When she testified, she indicated that she thought Skilling did have knowledge about all of this, and that he and Andy Fastow, another Enron executive, duped Ken Lay and the board of directors. Expect to hear the senators question Mr. Skilling about that, how much did he really know.

(BEGIN VIDEO CLIP)

SEN. PETER FITZGERALD (R), ILLINOIS: 71 percent of Enron's earnings for the 15 months they looked at were bogus, from transactions with just three of their partnerships. Now, how could Skilling not have known that such great percentage of the company's earnings were fictitious? He was the C...

(END VIDEO CLIP)

SNOW: Skilling's associates say he is looking forward to the opportunity to be here this morning and react to some of Sherron Watkins' accusations. They call her accusations "opinion," and not fact, but we don't expect any of the senators to go easy on him, Paula. In fact, one aide said to me this morning that if you believe that Jeffrey Skilling didn't know about any of these outside partnerships, well, you can also believe in the Easter Bunny -- Paula.

ZAHN: Ouch. Enjoy the fireworks. Thanks for the preview, Kate. And, of course, we'll be covering those hearings live.

The Enron scandal strikes a familiar chord for television producer Lowell Bergman. In the movie, "The Insider," Bergman, played by Al Pacino, fights to expose the tobacco industry and to protect his sources. As for the Enron scandal, Bergman has produced a front-line documentary, and will consult on a Fox TV movie dealing with what some are calling the company's gender wars. It is the story of how the Enron woman stood up to what he calls the "electric cowboys of Houston." And Lowell Bergman joins us now, early on a Tuesday morning, from Berkeley, California.

Good to see you, Lowell. Thanks for joining us.

LOWELL BERGMAN, PRODUCER: Good morning.

ZAHN: What is it you expect to see today, when we watch these fireworks between Sherron Watkins and Jeffrey Skilling?

BERGMAN: Well, actually, don't leave out Mr. McMahon. Mr. McMahon, who is going to be on that panel, is the person who actually talked with Jeffrey Skilling, and they both have different versions of what that conversation was all about.

Sherron Watkins says that she avoided Jeffrey Skilling because she thought that might terminate her career at Enron if she were to tell him what she thought was -- had gone wrong, so the real, if you will, criminal liability for -- potentially, for Mr. Skilling in testifying is whether Mr. McMahon's testimony and his testimony don't mesh.

ZAHN: Well, for starters, we know that what Sherron Watkins has testified to is completely different than what Jeffrey Skilling has admitted to. Let's quickly review some of the key parts of their testimony, right now, and I want to get your thoughts on it. Let's listen.

(BEGIN VIDEO CLIP)

JEFFREY SKILLING, FORMER CEO, ENRON: While I was at Enron, I was not aware of any financing arrangements designed to conceal liabilities or inflate profitability. SHERRON WATKINS, VICE PRESIDENT, ENRON: It would be my opinion that Mr. Skilling would be very well briefed about these transactions.

(END VIDEO CLIP)

ZAHN: So what you are saying, Lowell, is really the upcoming testimony of Jeffrey McMahon is the one that is going to help us decide which part of these stories to believe.

BERGMAN: Well, he's the one who says that he had a personal conversation with Mr. Skilling, whereas Miss Watkins says that she believes, she has reason to believe, and it was common knowledge, I think, at the time that Jeff Skilling was a hands-on manager. He wasn't exactly somebody who let things slip by him, and that was one of the reasons he was given command of the company.

ZAHN: I know you've also done some analysis of how -- what role women played in this scandal, and what role men played. So, are all the men "electric cowboys" of Enron, and the women are the good guys here?

BERGMAN: I think that really comes from a column my friend Maureen Dowd (ph) did, which was just an explanation of trying to understand what happened at Enron and how to tell the story. It doesn't necessarily mean that it's really a gender war per se.

However, you know, it's no surprise that in Houston and in the atmosphere that was going on at the time that this was a pretty macho bunch. They were -- Skilling, in particular, was feared in the industry. They were people who took no prisoners, both politically, and in terms of their economic operation.

ZAHN: Let's talk about this culture for women at Enron, because "Vanity Fair" reports in next month's issue that there actually was this so-called "hottie board" that was openly displayed at Enron headquarters, and here's a quote from that piece, "a vice president openly displayed a 'hottie board,' on which he ranked the sexual allure of Enron women." That's certainly had to promote the culture where you might want to be a whistle-blower, particularly if a male boss was involved.

BERGMAN: Well, they were a very aggressive bunch, and I am -- there will be ample stories, I think, coming out in the future about their personal lives, their social lives, and so on. Not so sure that that's so different than a lot of major companies in the United States, but I think in the -- there are some women who were involved at Enron who were quite aggressive and quite successful.

One we haven't heard from is Rebecca Mark, who was a contender with Jeff Skilling for the job of CEO, and left when he was appointed. So far, she hasn't talked, or talked about what she was involved in.

ZAHN: We are going to have to leave it there this morning, and we should mention that you have completed a documentary about the California energy crisis that focused on Enron long before this crisis, and where you determine the issue of deregulation was key, and we would love to have you come back and talk about that, but thank you for your preview of what we might expect later today on Capitol Hill.

BERGMAN: Good to be here.

ZAHN: Thanks, Lowell.

BERGMAN: Thank you.

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