An

Enron

(ENE)

employee raised questions with top executives in August about the company's accounting for special partnerships, two congressmen said.

TST Recommends

The Enron employee, whose name wasn't released, warned Chief Executive Kenneth Lay that the company had erected a "veil of secrecy" around partnerships it used to keep debt off its balance sheets. The partnerships were at the core of the accounting scandal that eventually led to the energy trader's bankruptcy filing last month.

The warning was disclosed Monday by Reps. Billy Tauzin and James Greenwood, who are investigating Enron for the House Energy and Commerce Committee.

"I am incredibly nervous that we will implode in a wave of accounting scandals,'' the Enron employee wrote. "It sure looks to the layman on the street that we are hiding losses in a related company and will compensate that company with Enron stock in the future."

The lawmakers said the letter prompted a "limited" investigation by the company's lawyers, who determined at the time that the issues raised by the employee didn't warrant a fuller probe.

It wasn't until Oct. 15 that the law firm, Vinson and Elkins, warned Enron that because of "bad cosmetics'' involving the partnerships and the "poor performance of the merchant investment assets placed in those vehicles and the decline in the value of Enron's stock, there is a serious risk of adverse and litigation.'" A day later, Enron announced it was taking a $1.2 billion reduction in shareholder equity due to losses from the partnerships, the lawmakers said.