Accounting Firms Settle Enron Suit
nytimes.com
July 15, 2003
By BLOOMBERG NEWS
In the first settlement of a lawsuit resulting from the collapse of the Enron Corporation two years ago, the network of foreign accounting firms once linked to Enron's auditor, Arthur Andersen, will pay $40 million, according to court papers.
The affiliated firms, collectively known as Andersen Worldwide Société Coopérative, are seeking to resolve suits filed by Enron investors and workers over Arthur Andersen's role in helping Enron hide more than $1 billion in losses, according to court papers filed last week in Houston. The accord does not cover Arthur Andersen, the papers say. Andersen Worldwide also agreed to pay $20 million to Enron's creditors.
The settlement is a fraction of the $29 billion that shareholders and former workers say they lost in Enron's meltdown. Enron, an energy trader, filed for bankruptcy protection in December 2001 after restating $586 million in revenue because of improper accounting tied to off-book partnerships. Its reorganization plan will pay creditors less than a fifth of the estimated $67 billion they are owed, officials said last week.
"There is a serious question as to whether a more favorable monetary result would be attained by a judgment after trial," lawyers for the University of California Regents said in court papers. The regents, who lost $145 million in pension funds invested in Enron stock, are the lead plaintiffs in a class-action suit against Enron executives and Andersen auditors.
Executives of Andersen Worldwide, which is based in Geneva, were not immediately available to comment on the settlement. Arthur Andersen shut down its auditing practice last year.
Under the Andersen Worldwide settlement, Enron shareholders and workers will split $25 million, the court papers say. An arbitrator will decide how the money is divided. The remaining $15 million will be used to finance litigation against Enron executives, Andersen's auditors in the United States and Enron's investment bankers and lawyers, court papers say. None of the money will be used to pay lawyers' fees.
Judge Arthur J. Gonzalez of Federal Bankruptcy Court in Manhattan approved the settlement on Friday. |
