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

To: Jorj X Mckie who wrote (666)	1/25/2002 5:58:56 AM
From: stockman_scott	Respond to of 3602

Lawmakers Skeptical of Andersen By PETE YOST Associated Press Writer Published January 25, 2002, 3:08 AM CST WASHINGTON -- Scandals usually have scapegoats, and so far the Enron Corp. investigation has David Duncan, who took the Fifth Amendment in front of Congress. The fired auditor from the Andersen accounting firm is perfect for the role. Thrown to the wolves for destroying documents, Duncan worked 900 miles away from his superiors in Chicago, who all insist they had no idea what Duncan was doing. But on Thursday, incredulous members of Congress refused to buy the firm's story. Republicans and Democrats on the House Commerce oversight and investigations subcommittee kept touching on the question of the day: Did Andersen executives look the other way while Duncan and dozens of employees cleaned out the Enron files in Houston? "Why in God's name didn't ... the top brass at Andersen immediately send out word to everyone ... in the Enron case ... to not touch a document, not shred a document?" asked Rep. Jim Greenwood, the panel's chairman. "The responsibility for that rests with the engagement partner," who was Duncan, replied Andersen executive C.E. Andrews. "And all of Mr. Duncan's superiors in the company ... knowing this meltdown is happening at Enron, knowing that this SEC (Securities and Exchange Commission) investigation is on, sat silently, just assuming that Mr. Duncan would do the right thing?" asked Greenwood. "They gave him no direction whatsoever?" "Mr. Duncan had been advised of our policies," Andrews replied. The congressmen zeroed in on the week of Oct. 8, eliciting a new disclosure from Andersen. The week started with Andersen hiring the prominent Wall Street law firm of Davis Polk & Wardwell to prepare for possible lawsuits arising from Enron's then-secret accounting and financial problems. Three days later, Andersen's Chicago headquarters sent Houston the firm's document destruction policy which permits discarding of a wide range of materials. It wasn't for another month -- after Andersen got a subpoena from the SEC -- that Chicago headquarters ordered Houston "to preserve all ... documents ... that we may have relating to the claims that are being filed" against the firm. The SEC began an inquiry of Enron on Oct. 17, the day after the energy trading company announced $600 million in third-quarter losses. It was Chicago headquarters attorney Nancy Temple who on Oct. 12 sent the document destruction policy to Houston. Under questioning, Temple said she had learned just days earlier the potentially explosive information that an Enron employee, Sherron Watkins, had made allegations about accounting practices the previous August. "I never counseled any destruction or shredding of documents," Temple testified on Thursday. "And I only wish that someone" in Houston "had raised the question so that we could have consulted and addressed the situation." Temple was quick to play down the significance of the Watkins allegations, noting that the law firm that reviewed them said Enron "did not need to take any further action." For his part, Andrews minimized the lawsuit angle in the hiring the Wall Street law firm, Davis Polk. "We engaged them to help us with ... financial reporting issues and possible litigation. And within the accounting literature, if you will, the term 'possible' is used frequently but does not mean probable," said Andrews. "And we had no reason at that particular point in time to expect litigation, no." At Davis Polk in New York, attorney Daniel Kolb who is fielding questions about the firm's representation of Andersen declined to comment. Kolb's legal specialties are securities litigation and professional liability. The congressional jury is still out on whether Duncan was thrown over the side by higher-ups who knew what was going on. "I still haven't made up my mind on whether Mr. Duncan was a rogue employee or whether Mr. Duncan was set up as a scapegoat," Greenwood said. In the Iran-Contra scandal, the Reagan administration clung to the notion that Marine Lt. Col. Oliver North was a rogue operator, a National Security Council aide secretly running an arms supply network unknown to the president and his Cabinet. Not unlike Duncan, North initially took the Fifth Amendment before Congress, then after being given a limited grant of immunity from prosecution said his superiors had approved everything he'd done. In an interview last week with congressional investigators, Duncan put the blame where he feels it belongs: at company headquarters. Copyright © 2002, The Associated Press

To: Jorj X Mckie who wrote (666)	1/25/2002 3:10:48 PM
From: stockman_scott	Respond to of 3602

Source: New York Reorganization Expert May Be Tapped to Replace Lay As Enron Leader By ALAN CLENDENNING AP Business Writer Friday January 25, 3:02 pm Eastern Time NEW YORK (AP) -- The front-runner to replace Kenneth Lay as chief executive of embattled Enron Corp. (NYSE:ENE - news) is a New York bankruptcy reorganization expert whose past clients include Bradlees, Cumberland Farms and Pegasus Gold Corp., a person familiar with the situation said. Stephen Cooper, managing principal of the reorganization adviser Zolfo Cooper, could be named to run Enron within several days and planned to fly to Houston Friday to meet with company executives, said the source, who spoke on condition of anonymity and confirmed earlier published reports. Enron spokesman Eric Thode declined to comment on Cooper or the company's progress in selecting a successor to Lay, who resigned as chairman and chief executive Wednesday night. Zolfo Cooper officials did not immediately return a phone message seeking comment. On its Web site, Zolfo Cooper says its executives ``have hands-on leadership experience under adverse conditions.'' ``Working as senior management or as part of a crisis team, we stabilize the business,'' the site says. ``Thus, we gain the necessary time to assess the situation, design, and implement programs to restore business' vitality and profitability. We maximize value by rebuilding the management process and reorganizing the business or prepare it for sale.'' Enron's collapse began in mid-October after the company announced a $618 million third-quarter loss and a $1.2 billion reduction in the company's equity. Subsequent revelations showed that the company masked debt in questionable partnerships that benefited some company executives. The company -- once No. 7 on the Fortune magazine list of the 500 largest companies -- filed for bankruptcy protection to reorganize on Dec. 2. Last week, a judge approved a plan that allows investment bank UBS Warburg to take over the company's energy trading operation, which accounted for 90 percent of Enron's $101 billion in revenue in 2000. On the Web: Enron: enron.com Zolfo Cooper: zolfocooper.com