This is way too bizarre. ENE fired its General Counsel and Treasurer, and for good reason. Seems those two were also partners in one of the LJM joint ventures, according to the following news blip. Arthur Andersen LLP (external auditors) ought to be cut ASAP.
=DJ Enron Investors -2: More Exits Seen If No Dynegy Deal
08 Nov 15:53
As for the restatement of earnings going back to 1997, investors said it was clearly having a negative impact on Enron's stock even though some had been expecting it.
John Waterman, of Rittenhouse Financial Services, said the information Enron disclosed in a filing with the Securities and Exchange Commission was "hard to
sort through."
Waterman said he was encouraged that the restatement didn't reflect any revenue recognition issues, and it still showed that there was growth in the business - albeit not as much as previously reported.
Enron had to restate the earnings because it should have included three of its off-balance sheet financing vehicles - Chewco Investments LP, Joint Energy Development Investments LP, or JEDI, and a unit of LJM Cayman LP - in its consolidated financial statements under the guidelines of generally accepted accounting principles.
Revelations about the involvement of Enron's Fastow in LJM are at the center of an investigation by the Securities and Exchange Commission, and led to demands from the financial community that he be terminated.
On Wednesday, Enron disclosed it has fired its treasurer, Ben Glisan, and its general counsel, Kristina Mordaunt, as well.
Gilsan, Mordaunt, and two former Enron employees were partners of LJM while serving at Enron.
Enron continues to say it had controls in place relating to Fastow's involvement with the partnerships. The board required review and approval of each transaction by the office of the chairman, the chief accounting officer
and the chief risk officer. Whether these controls and procedures were followed will be investigated by a special committee Enron has named.
Many expect that if Enron remains independent, more executive departures could be in store.
"The bottom line from my perspective is that Ken Lay, Jeff Skilling, and the board seemed to beaware (of Fastow's dealings with the LJM partnerships)," said Andre Meade, an analyst at Commerzebanc Securities. "Everyone's hands are
dirty, including Ken Lay. ... The firing the CFO and treasurer are not going to single-handedly solve the problems at Enron," he continued.
Others also are questioning the role of Arthur Andersen LLP, Enron's independent auditor.
"People like us have to rely on people like them," said Rittenhouse's Waterman. |
