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Non-Tech : The ENRON Scandal -- Ignore unavailable to you. Want to Upgrade?

To: Bill Jackson who wrote (622)	1/16/2002 1:39:41 PM
From: Karen Lawrence	Read Replies (2) \| Respond to of 5185

Enron storm sweeps up Arthur Andersen New York: Accountancy group Arthur Andersen today rejected dire warnings over its future viability, amid uproar over its destruction of documents related to the collapse of energy titan Enron. "We are a strong firm and we expect to be around for a long time," Arthur Andersen spokesman Patrick Dorton said. The accountant's customers were making inquiries about the affair, he said. "Our clients are interested in this matter. They have been asking good questions. They have generally been very understanding." The heat has intensified since a Time magazine story yesterday said Arthur Andersen sent an internal memo on October 12, instructing workers to destroy related audit papers just four days before Enron revealed a massive loss. Enron filed for bankruptcy on December 2 - the biggest corporate failure in history. Many Enron staff holding pensions in company shares lost their life savings while top executives made off with millions. Senator Joseph Lieberman, chairman of the Governmental Affairs Committee - which is among the government agencies investigating Enron - has warned its days may be numbered. "We know Arthur Andersen, the supposedly independent auditor, covered up facts very relevant to the condition of Enron," Lieberman told CBS television today. "Arthur Andersen is a great company with a great name. That name is being sullied and ultimately this Enron episode may end this company's history," he said. Arthur Andersen, the outside accountant for Enron, said last week it had destroyed documents related to its audit of the company, invoking a sharp reaction from US regulators. Following the Time report, it issued another statement acknowledging questionable internal actions. "Andersen is committed to getting the facts and taking appropriate actions in the Enron matter," Andersen said. "We are moving deliberately and as quickly as possible to understand what happened," it added. "We acknowledge there were internal communications that raise questions. Until we know more, it would inappropriate to comment further. We will take actions at the appropriate time. We hope to be able to announce progress in that regard shortly." Arthur Andersen repeated it had suspended its records management policy and asked former US senator John Danforth immediately to review the company's practices. "After government agencies have had a full opportunity to consider these matters, Danforth also will advise the firm to ensure that all appropriate remedial and disciplinary actions have been taken," the company said. One source at a major rival accounting firm said Arthur Andersen now faced an audit of its own operations and the risk of financial sanctions, besides incurring the damage to its name. The New York Times questioned yesterday whether Arthur Andersen could survive. "Things look very bleak for Andersen," Edward Ketz, associate professor of accounting at Pennsylvania State University, told the newspaper. "There is a chance that they go under on this one." Arthur Andersen's reputation already took a beating in June last year, when the Securities and Exchange Commission (SEC) fined it $US7 million($A13.55 million) over a fraud at Waste Management. "Arthur Andersen and its partners failed to stand up to company management and thereby betrayed their ultimate allegiance to Waste Management's shareholders and the investing public," SEC chief investigator Richard Walker said in a statement at the time. The SEC is investigating the Enron collapse, and has expanded its probe to include the destruction of documents by Arthur Andersen. For more than a decade, Enron has been a major contributor to US politicians both Democrat and Republican, and among those benefitting most was US President George W Bush. Bush received $US623,000 $A1.21 million) from Enron since launching his political career in 1993, according to news reports in Washington. AFP