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

To: Gordon A. Langston who wrote (331)	1/17/2002 1:28:47 PM
From: Sully-	Read Replies (1) \| Respond to of 3602

Memo Shows Andersen Knew of Enron's Deals By Kevin Drawbaugh WASHINGTON (Reuters) - An Andersen memo has provided a smoking gun that Enron Corp.'s auditor knew about the energy trader's murky financial transactions long before they triggered its collapse, and the head of the SEC prepared to unveil ways to improve oversight of auditors. Andersen on Thursday confirmed a memo dated Feb. 6 recounted a meeting of its executives who discussed the amount of debt kept off Enron's books. The executives, who considered dropping Enron as a client, also discussed how material the transactions were to understanding the energy trader's finances. The memo is sure to raise new questions about the role of accountants and how they sign off on a company's financial statements, and could spark lawsuits. As U.S. regulators respond to those questions, Securities and Exchange Commission Chairman Harvey Pitt scheduled a 1:30 p.m. EDT (1830 GMT) news conference where he was expected to outline broad concepts on the oversight of auditors. Pitt was expected to outline a new accounting oversight panel to include accountants and non-accountants, possibly along the lines of the existing, but little-known Public Oversight Board. ``He will talk about new ideas for private sector regulatory organization,'' SEC spokeswoman Christi Harlan said. Andersen has become embroiled in the Enron scandal, following disclosures its employees destroyed thousands of Enron-related documents in recent months. Andersen spokesman Charlie Leonard said the meeting outlined in the memo was simply a standard annual review of Enron. The executives discussed whether the auditor should retain now-bankrupt Enron as a client, he said. On Wednesday, congressional investigators revealed that Andersen was warned of trouble at Enron last summer by an internal whistle-blower. In a conversation with an unidentified Andersen partner, Enron executive Sherron Watkins raised concerns about accounting problems with the off-balance-sheet partnerships that Andersen signed off on in February. Watkins, a former Andersen employee, also telephoned a friend at the accounting firm, prompting another examination of its relationship with Enron. Andersen was assured by Enron that outside law firm Vinson & Elkins had been hired to investigate Watkins' concerns, said Leonard. ``She informed the audit team in Houston of her concerns and the audit team in Houston did exactly what they were supposed to do,'' said Leonard. ``They informed Enron's general counsel.... We were assured that an outside law firm was looking this.'' Enron's use of off-balance-sheet transactions to keep debt off its books has come under scrutiny since the company collapsed late last year and filed for bankruptcy on Dec. 2, the biggest in U.S. history. In recent weeks, Andersen has become deeply embroiled in the scandal, following disclosures that its employees destroyed thousands of Enron-related documents in recent months. In an example of how Enron tried to boost its earnings in financial statements, The Wall Street Journal on Thursday reported Enron claimed $110.9 million in profits from a short-lived venture that sharply limited losses from its once highly touted broadband unit. As a result of the venture, broadband losses at Enron were limited to $67 million over two quarters. Enron claimed its broadband unit was promising, though still losing money, and in January 2001 said it would eventually generate $45 billion in revenues, which helped prop up its high-flying stock price. Enron stunned analysts in October with its first quarterly loss in more than four years. Lumped in the third-quarter loss of $618 million were losses from the venture, which at its peak had about 1,000 test customers, many of whom did not pay for the service offering movies over telephone lines. biz.yahoo.com