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

To: stockman_scott who wrote (704)	1/25/2002 9:26:51 PM
From: Karen Lawrence	Read Replies (1) \| Respond to of 3602

Anonymous letter prompts internal audit of KMart: Kmart Launches Accounting Probe Jan 25 4:43pm ET By Anna Driver CHICAGO (Reuters) - Bankrupt retailer Kmart Corp. said on Friday it launched an internal investigation of its accounting as a result of an anonymous letter sent to its directors, auditors and government regulators. The action by Kmart, which filed for bankruptcy earlier this week, is the latest sign of growing unease about corporate accounting practices because of the scandal over the collapse of energy trading giant Enron Corp. . The letter, which purports to be from Kmart employees, may signal increased willingness by workers to blow the whistle on accounting practices at troubled companies, one analyst said. Kmart, the No. 2 discount retail chain behind Wal-Mart Stores Inc. , said it contacted the U.S. Securities and Exchange Commission after receiving the letter. The agency has since authorized a private investigation. The SEC said it would request documents from Troy, Michigan-based Kmart, and a Kmart spokesman said the retailer plans to cooperate fully. "The responsible action by any company is to conduct an investigation and let people know that we're cooperating fully with the SEC investigation," said Jack Ferry, a Kmart spokesman. Ferry would not provide details of the letter but characterized its contents as "very vague." The retailer's statement did not indicate when the letter was received. SEC would not comment on the matter. ANALYSTS, ACADEMICS SAY MORE INFORMATION NEEDED "It's quite possible that some disgruntled employee is trying to get back at Kmart, and one way to do that, especially in the current atmosphere, is to accuse them of improper accounting," said Itzhak Sharav, an accounting professor at Columbia University in New York. "We need to know who these people are (those that sent the letter) and whether they were in a position to know about its accounting practices," Sharav said. David Hawkins, a professor at Harvard Business School and an accounting analyst with Merrill Lynch, said areas where questions may rise in the retail industry include miscounting inventory and inflating profit margins. "Enron has made people very conscious of accounting problems," Hawkins said. "I think there's going to be a trend toward whistle blowing in the accounting area." One Wall Street analyst said Kmart's statement contained few specifics, so drawing conclusions would be hard. "The statement was rather opaque, and in light of what's going on at Enron, I'm sure people are envisioning the worst," said Marie Driscoll, a retail analyst at Argus Research. "Who knows what is going on, but I certainly don't think Kmart is Enron." Kmart's board of directors hired law firm Skadden, Arps, Slate Meagher & Flom and accountants Deloitte & Touche LLP to conduct an independent investigation. PricewaterhouseCoopers LLP is Kmart's auditor, but an official of the accounting firm declined to comment on the investigation. Kmart filed for Chapter 11 bankruptcy protection on Tuesday after its sales over the crucial Christmas holiday shopping season were disappointing compared with those of competitors. Enron as late as last summer was ranked the seventh-largest corporation in the United States, but its stock price collapsed and employee pension investments evaporated after reports that it used accounting gimmicks to hide debt linked to complex partnerships. Enron is now the subject of numerous government investigations. Shares of Kmart closed off 8 cents, or 8.6 percent, at 85 cents Friday on the New York Stock Exchange.

To: stockman_scott who wrote (704)	1/25/2002 9:33:51 PM
From: Karen Lawrence	Read Replies (2) \| Respond to of 3602

And too, recently Baxter was looking to buy a new larger yacht. I used to read true crime and Texas had murders that never seemed to get solved. Seems suspicious. article from Houston Chronicle: SUGAR LAND -- Suburban Houston neighbors of J. Clifford Baxter, the former Enron Corp. vice chairman found dead in his car today in an apparent suicide, said his family enjoyed their privacy and planned to live on a yacht some day. The family of four, who one next-door neighbor said were boating enthusiasts, has spent the months since Baxter's resignation last May searching for a larger yacht. So far, they had not found "the perfect one." "I feel so terrible for that family," said the neighbor, who declined to give her name. "I woke up (early this morning) and I had neighbors calling, asking why I had a police car parked in front of my home." Police found Baxter, 43, dead in his car, which was parked on a nearby street, with a bullet wound to the head. His car was parked in the turnaround of a median in view of two $1 million-plus homes and less than a half-mile from a law enforcement substation. Four Sugar Land police officers guarded the Baxter home today, whose brown wooden front door is adorned with an American flag, checking well-wishers as they streamed in during the day and keeping a crush of reporters and photographers prowling the southwest Houston city. Baxter, along with his wife, Carol, and son and daughter, J.C. and Lauren, lived in a reddish brick home with black shuttered windows valued at more than $700,000, comparable to other homes in the golf course community and several times more than the median price in the Houston area. The family's nearly 2-year-old home was among the first built on the block, neighbors said. They moved there in 2000 from another Sugar Land neighborhood, where a former neighbor had fond memories of Baxter. "Cliff was a good guy, and his family was good people," said the man, who also declined to give his name. He said Baxter enjoyed playing the piano and guitar, and his son often played basketball outside. Records indicate the family's charitable foundation gave $5,000 to help expand the school at nearby St. Laurence Catholic Church, although a receptionist at the parish disavowed any knowledge of the Baxters. "We don't know those people," the woman said.