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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Sully- who wrote (46612)	1/17/2002 2:30:01 PM
From: Dealer	Read Replies (2) \| Respond to of 65232

SEBL kicking butt! Wondering what effects MSFT earnings will have on the market tonight? dealie

To: Sully- who wrote (46612)	1/18/2002 6:01:07 AM
From: stockman_scott	Respond to of 65232

Enron and Its Auditor Arthur Andersen Trying to Pin Responsibility on Each Other for Collapse By MARCY GORDON AP Business Writer Friday January 18, 2:42 am Eastern Time WASHINGTON (AP) -- Enron Corp. (NYSE:ENE - news) and its auditor, Arthur Andersen, are trying to pin responsibility on each other for allowing questionable financial practices to continue and push Enron toward bankruptcy. Enron abruptly fired Andersen, citing its destruction of thousands of documents and its accounting advice. Sniping back, Andersen said Thursday its relationship with Enron ended in early December when the company slid into the biggest corporate bankruptcy in U.S. history. Thousands of employees lost their jobs and many had their retirement accounts -- predominantly in Enron stock -- essentially wiped out. Andersen's chief executive, Joseph Berardino, said the accounting firm's officials dutifully informed Enron's general counsel after learning of the concerns of an Enron executive in August. Enron told the Andersen officials that it had engaged a law firm to investigate, Berardino noted. Both Enron and Andersen are under increasing scrutiny from Congress and federal law enforcement agencies for their roles in the failure of the world's largest energy-trading concern. One of the Andersen auditors has been talking freely to congressional investigators, and key employees in both companies have blamed senior officials for the debacle. ``We can't afford to wait any longer,'' Enron Chairman Kenneth Lay said in a statement, announcing that Enron's board of directors had dismissed Andersen -- which earned huge fees over the years from Houston-based Enron. The firing came as evidence grew that the Andersen auditors had serious questions about Enron's financial practices as early as a year ago, but did nothing to correct them. Enron announced it was severing a relationship with Andersen on Thursday just hours after the House Energy and Commerce Committee demanded that Andersen provide more documents detailing what the auditors knew about Enron's use of partnerships to keep hundreds of millions of dollars in debt off the company's books. Patrick Dorton, an Andersen spokesman, said the Big Five accounting firm remained ``committed to continuing to address the issues related to the collapse of Enron in a forthright and candid manner.'' As to Andersen's dismissal by Enron, Dorton said, ``Our relationship with Enron ended when the company's business failed and it went into bankruptcy.'' Andersen has acknowledged it destroyed Enron-related documents, possibly as early as September. Lay cited the document shredding and Andersen's sacking of the head of its Enron account, David Duncan, as reasons for dropping the firm. In addition to investigations by the Justice Department and the Securities and Exchange Commission, 10 congressional committees or subcommittees are examining the Enron collapse and Andersen's auditing of the energy trader's books. Documents obtained by the House committee's investigators show that senior managers at Andersen raised concerns about Enron's accounting practices -- and problems they might bring with the SEC -- in February and considered dropping the company then as a client. During a high-level meeting that month, Andersen executives expressed concern about Enron's off-the-books accounting for profits from its complex web of partnerships, especially one headed by Andrew Fastow, who also was Enron's chief financial officer at the time. Fastow made some $30 million from the partnerships, according to investigators. Summarizing the meeting, Andersen accountant Michael Jones wrote in an e-mail that the discussions ``focused on Fastow's conflicts of interest ... and the amount of earnings Fastow receives'' from the partnership while also Enron's top financial officer. Another document obtained by the congressional investigators disclosed that Andersen officials were told in August by an Enron vice president, Sherron Watkins, of her serious concerns about the off-the-books deals at Enron and that the company ``will implode in a wave of accounting scandals.'' However, Andersen decided to continue to work for Enron, noting that the fees from the Enron account could reach $100 million a year and that the risks posed by Enron's business practices could be managed. The Jones memo went to Duncan, Andersen's lead Enron auditor, who was fired by the accounting firm earlier this week. Jones suggested that Andersen further investigate whether the SEC might have problems with Enron's use of its partnerships. Duncan has told House investigators that no such investigation was pursued. Enron acknowledged to the SEC on Nov. 8 that it had overstated its profits by $586 million as it shielded losses in the partnerships, including the one headed by Fastow. Andersen, in a statement, characterized the February 2001 meeting about Enron as not unusual and said its purpose was to provide a general review of the Enron account. In related developments: --SEC Chairman Harvey Pitt said the Enron collapse was just the latest in a series of horrific accounting failures at big companies that burned investors and eroded their confidence. He proposed a new private-sector body to regulate the accounting profession. --The labor-funded Citizens for Tax Justice reported that an analysis of Enron financial documents showed the company, like dozens of other major corporations, paid no corporate income taxes in four of the past five years -- although it was profitable.