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To: Square_Dealings who wrote (79833)	12/13/2001 6:52:20 AM
From: long-gone	Respond to of 116753

Wednesday December 12 2:47 PM ET Enron Auditor Takes Some Blame By MARCY GORDON, AP Business Writer WASHINGTON (AP) - The head of Enron Corp.'s longtime auditing firm told Congress Wednesday the tragedy of the company's collapse shows that the accounting firm and the entire profession will have to change. ``What happened at Enron is a tragedy on many levels,'' Arthur Andersen LLP Chief Executive Officer Joseph Berardino said in testimony prepared for two House Financial Services subcommittees. ``Andersen will have to change, ... the accounting profession will have to reform itself. Our system of regulation and discipline will have to be improved.'' Robert Herdman, chief accountant of the Securities and Exchange Commission, which is investigating Enron, said a recent spate of accounting irregularities by big corporations ``may shake investors' confidence in our system of financial reporting and our capital markets,'' according to his prepared testimony. Congress is investigating the failure of Enron, whose swift downfall left countless investors burned, thousands of employees out of work with decimated retirement savings and the once high-flying company in federal bankruptcy court. At the House hearing, lawmakers called the Enron debacle the biggest corporate failure in recent history and heaped criticism on its executives for enriching themselves while running the company into the ground. Company officials were ``just having too much fun,'' said Rep. Richard Baker, R-La., chairman of the Financial Services subcommittee on capital markets. ``We must make the careful determination of whether we are dealing with a case of outright fraud and violation of existing securities laws.'' The huge energy-trading company declined to send any officials to the congressional hearing. Investigators for another House committee are trying to find Enron's former chief financial officer, the lead architect of complex partnerships that are under government scrutiny. Amid the company's strife, nearly 600 employees deemed critical to its operations received more than $100 million in bonuses last month as Enron faced a merger that unraveled and then bankruptcy. The SEC is examining Enron's use of questionable partnerships that allowed the company to keep some $500 million in debt off its books, and has issued subpoenas to Andersen related to its auditing of Enron's accounts. Enron, which only months ago was the nation's seventh-biggest in revenue, has acknowledged that it overstated profits for four years. Subjects being examined at the hearing included the Houston-based company's accounting practices, potential securities law violations and Enron's handling of its employees' 401(k) retirement investment plans. Absent from the hearing was Enron Chairman and Chief Executive Kenneth Lay, who had been asked to appear by the lawmakers. ``I don't think they want to, or are not prepared to answer some very pointed questions about what went wrong,'' said Rep. Michael Oxley, R-Ohio, chairman of the Financial Services Committee. Enron spokeswoman Karen Denne said neither Lay nor any other Enron officials were testifying because ``we don't believe we would be able to adequately serve the interest of the committee while at the same time trying to serve the interest of our creditors, shareholders and our current and former employees.'' Lay, who built the world's largest energy trader by buying electricity from generators and selling it to consumers, is no stranger to Washington. He is a friend of President Bush and one of his largest campaign contributors, donating $250,000 to the Republican Party during Bush's run for president and raising at least $100,000 for Bush from other donors. Enron and its employees given more money to Bush's various campaigns than any other donor, according to the watchdog Center for Public Integrity. Lay was among the executives who met privately with Vice President Dick Cheney as his task force formulated an energy plan last spring. Enron filed for bankruptcy protection from creditors on Dec. 2, following a six-week downward spiral, and also filed a $10 billion lawsuit against smaller rival Dynegy Inc. for scrapping a proposed buyout. In addition to the SEC probe, Enron also is under investigation by the Justice Department. The Labor Department is looking into Enron's handling of its employees' retirement benefit plans. Before filing its bankruptcy petition, Enron prohibited its workers for several weeks from selling stock held in voluntary retirement plans while the share price plunged. Worth more than $80 a year ago, Enron's stock has tumbled to less than a dollar a share. - On the Net: House committee: house.gov SEC: sec.gov dailynews.yahoo.com Arthur Andersen LLP: andersen.com