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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Mr. Whist who wrote (201523)	11/8/2001 10:32:10 PM
From: gao seng	Read Replies (1) \| Respond to of 769670

Actually, this one would fall on Rubin. But what the heck, he worked for Clinton, right? Fund alleges fat fees biased Andersen on Enron (UPDATE: adds SEC declined comment, paragraph 5) By Kevin Drawbaugh WASHINGTON, Nov 7 (Reuters) - Enron Corp. (NYSE:ENE - news) paid one of the largest audit bills in corporate America last year to Arthur Andersen, regulatory filings showed on Wednesday, as the Big Five accounting firm faced a lawsuit in Oregon alleging its high-priced audit of the battered energy giant was flawed. ADVERTISEMENT Houston-based Enron, rocked by a federal investigation and trading at historic lows, paid Arthur Andersen $52 million last year in audit and non-audit fees, according to Enron's 2001 proxy filed with the Securities and Exchange Commission. That figure topped the fees paid by all similarly sized utility companies listed along with Enron on the Dow Jones utility index, and all but a handful of the 30, mostly much larger companies in the Dow Jones industrial average. The huge revenues taken in by Arthur Andersen from Enron -- comprising $25 million in audit fees and $27 million in other fees -- amounted to about $1 million a week last year. That rich revenue flow influenced the accounting firm's judgment when it came to examining some unusual outside partnership arrangements involving Enron now being probed by the SEC, alleged a lawsuit filed last week in Oregon. The SEC declined to comment. ``Arthur Andersen enjoyed a lucrative, long-standing business relationship with Enron's senior management for which they received millions of dollars,'' said the lawsuit filed by the Southern Electrical Retirement Fund, an electricians' pension fund, against Enron officers and Arthur Andersen. ``Maintaining the client relationship was highly dependent on the individual defendants, particularly Enron's CEO (Kenneth) Lay, and Arthur Andersen compromised themselves to do so,'' alleged Southern Electrical, which owns Enron shares. A spokesman for Arthur Andersen said the Chicago-based firm had not seen the Oregon lawsuit and declined comment. He also declined to comment on the relative size of Enron's fees. The troubles of Enron beginning last month have led to numerous lawsuits against company officers, but the Oregon action was the first known to target its auditor, as well. As the first anniversary of the issuance of SEC auditor independence rules approaches next week, the Enron-Arthur Andersen relationship was coming under increased scrutiny by regulators, plaintiffs' attorneys and institutional investors. CRITICS SAY ANDERSEN SHOULD HAVE DONE MORE Arthur Andersen should have done more as auditor for Enron to alert investors to the outside partnerships that are now being investigated by authorities, accounting experts said. ``It certainly has to raise a lot of eyebrows, especially in the independence and objectivity issue,'' said Jay Nisberg, an accounting consultant based in Ridgefield, Connecticut. Arthur Andersen should have pushed harder for more and clearer disclosure of the partnerships' potential for conflicts of interest and financial risk to Enron, critics said. Enron last month ousted its chief financial officer Andrew Fastow. He was replaced by another Enron executive. Fastow was instrumental in setting up and managing the partnerships -- LJM2 Co-Investment LP and LJM Cayman LP -- that did complex financial transactions with Enron, Fastow's employer. The transactions were disclosed to Enron investors in annual 10K filings and proxy statements issued in 2000 and 2001. But Andersen should have done more to put the disclosures in plain English and highlight their potential for possible conflicts and risk to Enron's finances, said critics. ``The activities of these particular partnerships and the role of Enron in them, it's not the kind of thing you stick in the proxy statement at the back somewhere in a series of innocuous paragraphs,'' said Mark Cheffers, who heads accounting consultancy AccountingMalpractice.com in Massachusetts. Enron -- a former natural gas pipeline group that transformed itself into the nation's largest energy trader -- said last month it was taking a $1 billion charge against earnings, as well as cutting shareholder equity by $1.2 billion largely due to soured transactions with Fastow's partnerships. Enron spokeswoman Karen Denne has said that Arthur Andersen knew about the LJM partnerships and ``reviewed them to the extent they deemed necessary.'' ANDERSEN'S WOES WITH WASTE MANAGEMENT Earlier on Wednesday, Waste Management Inc. (NYSE:WMI - news) said Andersen would pay the firm $20 million to settle a professional malpractice suit related to an accounting scandal the garbage hauler was embroiled in more than two years ago. Waste Management itself agreed to pay $457 million to settle a class action lawsuit filed against it related to the scandal and problems that hammered its share price. The impact of the settlement, coupled with criticism of Andersen's handling of Enron, is likely to hurt Andersen's brand and influence the type of advice and services it provides clients in the future, Cheffers said. ``It's obviously a jolt to their reputation,'' he said. ``But the bigger question is if they're going to reevaluate the advice they give their clients.'' In June, Arthur Andersen was fined $7 million by the SEC to settle charges it filed false and misleading audit reports of Waste Management in the largest ever civil penalty against a Big Five accounting firm, according to the SEC. Andersen did not admit or deny the charges. (Additional reporting by Deepa Babington in New York) biz.yahoo.com