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

To: KLP who wrote (1217)	2/3/2002 10:00:04 PM
From: c.horn	Respond to of 3602

And she edited it. It was 10 times worse.

To: KLP who wrote (1217)	2/4/2002 12:39:39 AM
From: stockman_scott	Respond to of 3602

Internal Enron Probe Spreads Blame The Associated Press Feb 2 2002 11:36PM HOUSTON (AP) - An internal probe into Enron Corp.'s finances spread the blame for the company's downfall from greedy architects of questionable partnerships to executives, directors and auditors who failed to watch them. The probe, released late Saturday and led by University of Texas School of Law Dean William Powers Jr., said top members of Enron's financial team invested in or created partnerships that facilitated accounting abuses while earning them millions. In one case, the report said, former chief financial officer Andrew Fastow made about $4.5 million from a $25,000 investment in about two months. One of Fastow's employees, Michael Kopper, earned at least $10 million from a $125,000 investment in one of the partnerships, the report said. The partnerships were touted within the company as money-saving vehicles that bent rules without breaking them, the report said. They hid debt that became apparent when the complexity of the accounting veered out of control. The report said former chief executive officer Kenneth Lay and Enron's directors weren't fully informed about the scope of employee involvement in some of the partnerships. Lay told the internal investigators that a letter he received in August from executive Sherron Watkins criticizing the partnerships was ``thoughtfully written and alarming.'' ``I am incredibly nervous that we will implode in a wave of accounting scandals,'' Watkins wrote just months before Enron spiraled into the largest bankruptcy in history in December. Powers' report also said Chief Accounting Officer Richard Causey, Chief Risk Officer Richard Buy and Jeff Skilling, former chief executive officer, as well as the board failed to rigorously control how the partnerships operated. ``No one in management stepped forward to address the issues as they arose, or bring the apparent problems to the board's attention,'' the report said. In addition, the report said former Enron auditor Arthur Andersen LLP advised Enron managers on the partnerships and billed the company $5.7 million beyond regular audit fees for advice on two of them. ``It confirms some of the worst conjectures about what these people were doing,'' said John Olson, an analyst with Sanders Morris Harris in Houston. Fastow's spokesman, Gordon Andrew, declined comment on the report Saturday. Kopper's telephone number was unlisted. A spokeswoman for Skilling, Judy Leon, said the report showed that Skilling was not involved in any impropriety. Enron spokeswoman Karen Denne declined comment. Powers was appointed to Enron's board on Oct. 28 to investigate company finances shortly after the former energy giant released a massive third-quarter earnings loss and reduced shareholders' equity by $1.2 billion. His position on the board makes his objectivity suspect, said Charlie Leonard, a spokesman for Arthur Andersen. ``The authors of this report, whose independence has already been called into question, were hand chosen by the Enron board and their conclusions appear to be extremely self-serving,'' he said. Powers said the intent of the report was ``to shed light on certain related-party transactions and I believe the report does that. I'll save all comment on the report for my congressional testimony'' on Tuesday. Four days before Powers' appointment, Enron fired Fastow. Less than a month later Enron erased millions of dollars in profits when the company restated earnings from 1997 - when the partnerships were first created - through last year. While Fastow's stake in the partnerships was disclosed to Enron's board, Kopper's was kept quiet and both periodically made investments without approval from directors or top managers as required by the company's code of conduct. The partnerships were disclosed in filings with the Securities and Exchange Commission, but those disclosures ``were obtuse,'' the report said. The report concluded that the partnerships grew from a flawed idea and all the other problems culminated in ``overreaching in a culture that appears to have encouraged pushing the limits.'' _________________________ Associated Press reporters Juan A. Lozano and Pam Easton contributed to this report.