SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?


To: Jim Willie CB who wrote (48798)3/19/2002 12:48:23 PM
From: stockman_scott  Respond to of 65232
 
Here's an interesting post on HP...

messages.yahoo.com



To: Jim Willie CB who wrote (48798)3/19/2002 2:15:53 PM
From: stockman_scott  Respond to of 65232
 
Remedy for Enron's moral anorexia

ENRON AFTERMATH
By Lisa Martinovic
The San Francisco Chronicle
Sunday, March 17, 2002

Now that Enron has been shunted off the
front pages and left to squirm under
congressional microscopes, it's time to
rethink how we as a society should deal
with white collar criminals who
consciously -- or through the
convenience of willful ignorance -- inflict
so much harm on so many.

Given a government whose tax, banking
and regulatory codes are in no small
measure authored by Fortune 500
operatives, it will be a miracle if the
corporate perps don't all vanish like
white rabbits down ready-made offshore
loopholes.

But surely, some of the key players will
eventually be found criminally liable, not
merely guilty of reprehensible business
practices. And when that time comes, we
need to be as creative with our
punishment as they were with their
accounting practices.

While the nation waits for criminal
indictments and meaningful regulatory
reform, it's safe to say that, over the past
few months, outrage has been the
preponderant response to every new
revelation of evidence shredding, debt
concealing, energy supply manipulating
and political favor dispensing in the epic
spectacle that was Enron.

But before we scream "off with their
heads," it's worth considering that most
people who do evil things are not
inherently evil: They are sick.

And greed is but one manifestation of the
disease we understand as addiction.
Anyone who devotes his or her life to the
maniacal pursuit of profit uber alles --
irrespective of who gets mangled in the
wake -- is psychologically impaired, to
say the least.

Should you doubt the perversity of their
intentions, recall that these were the
men who named their shell corporations
Raptor (homage to a bird of prey or "one
who seizes by force" -- tellingly, the root
of the word is rape), and Condor, a type
of vulture, "a person or thing that preys
greedily or unscrupulously."

And in the case of Enron, that creature
did not feast on carrion, but on the
still-pulsating viscera of its employees. In
a spiritual sense, this is akin to
cannibalism. You cannot cripple the
financial lives and futures of employees
who placed their trust in you without
having abandoned your own moral center
(presuming you had one to begin with).

Seen in this light, Enron's corporate
malefactors can rightly be viewed as
wealth-and-power addicts who need help
just as desperately as any stark raving
crackhead.

This is not for a moment to suggest that
the Enron-Andersen cabal escape jail
time. On the contrary. Much as judges
remand drunken drivers to AA, so, too,
should the prison sentences of felonious
executives include mandatory
participation in an applicable 12-step
program such as Debtors Anonymous.

With the support of fellow addicts, they
would learn that insatiable greed usually
masks core insecurity and scarcity
issues. Left untreated, these psychic
wounds can lead to the moral anorexia
that characterizes a life of corporate
crime.

Fortunately, given enough years
practicing spiritual surrender and
humble self-scrutiny, most people can
been restored to reason and eventually
return to polite society to serve some
useful purpose.

Essential to this transformation is the
making of amends to those that the
addict has harmed: Economic restitution
for the victims is the obvious first step.

In the case of Enron, there are enough
injured parties to constitute numerous
class-action lawsuits. And while I fully
support the vigorous prosecution of these
claims, and the recouping of as many
pension funds and severance packages
as possible, we can do more to vaccinate
society against the spread of Enronitis.

White-collar criminals who ravage
millions of lives at the stroke of an
accounting pencil need to face those they
have harmed, listen to their stories and,
yes, feel their pain. Picture a prison,
somewhere in Texas, its visiting area
overflowing with former Enron employees
and their families anticipating a good
long talk with Messrs. Lay, Fastow and
Skilling. Perhaps these sessions could be
televised so all the world might bear
witness to the consequences of executive
hubris.

Which naturally invites us to move up
the food chain and bring justice -- and,
ultimately, one hopes, healing -- to those
who drank deep at the beast's tainted
trough: our senators, regulators, and
occupants of the Oval Office. Truth is:
Whether it's cocaine trafficking, insider
trading or influence peddling, criminal
behavior is an outgrowth of some form of
psychopathology that begs for treatment
just as fiercely as it demands jail time.

And in a just world -- the world we must
now create -- no one would be able to buy
his or her way out of either.



To: Jim Willie CB who wrote (48798)3/20/2002 1:33:56 AM
From: stockman_scott  Read Replies (1) | Respond to of 65232
 
Crumbling Andersen Threatens Competition

By Greg Cresci
Tuesday March 19, 6:31 pm Eastern Time

NEW YORK (Reuters) - The crumbling of the Andersen empire threatens to reduce competition among accounting firms, raise costs for clients and hamper efforts at cleaning up the industry, experts warned on Tuesday.

Reeling from its role in the Enron (Other OTC:ENRNQ.PK - news) scandal, Chicago-based Andersen is at the edge of an abyss, with clients defecting, lawsuits looming and partners across the globe rushing for the exits. Enron filed for the biggest bankruptcy ever in December after revealing huge losses from off-the-books partnerships.

If Andersen disintegrates entirely, the Big Five group of accounting firms become the Big Four, giving the survivors a lot more market power at a time when Andersen clients would be looking for new auditors to take on their work.

Perhaps more importantly, radical reforms proposed by an independent oversight board headed by former Federal Reserve Chairman Paul Volcker that were meant to pull Andersen back from the brink would vanish without a trace instead of becoming a blueprint for ethical accounting, experts say.

``There is already now an oligopoly, and (Andersen's absence) would accelerate that trend,'' said Itzhak Sharav, an accounting professor at Columbia University, who predicts that higher fees may result.

``If the firm doesn't survive, then Volcker's efforts are over because he is only working with Arthur Andersen, he has no other mandate,'' Sharav said. ``If Andersen goes under and ceases to exist as we know it, then he and his oversight board are out of the picture.''

The Big Five accounting firms, with combined annual revenue of $65 billion, sign off on the financial results investors depend on when buying and selling shares of publicly traded companies. Together, they represent 87 percent of the annual revenue brought in each year by the 100 largest accounting firms, according to Auditor Trak, a unit of Strafford Publications.

So would Andersen's demise exacerbate an already top-heavy industry and lead to antitrust concerns?

``It certainly has that potential,'' said Robert Willens, an analyst at Lehman Brothers. ``It's a little early to say but it certainly is something to be mindful of and to monitor very closely.''

PRECARIOUS POSITION

Underscoring its precarious position, Andersen faces an obstruction of justice charge brought by the Department of Justice, billion-dollar lawsuits from angry Enron investors and an exodus of prestigious clients. Meanwhile, its partners overseas have announced plans to merge with rivals and a bankruptcy filing is possible.

This sudden decline of the 89-year-old firm, sparked by its role as auditor of Enron's books, clearly jeopardizes Volcker's reform proposals.

Those proposals have been praised for addressing perceived conflicts of interest in the accounting profession, and are widely seen as the best way to combat situations in which fat consulting fees keep auditors from strenuously analyzing clients' books. Across the industry, revenue from consulting far outstrips revenue from auditing.

Volcker's panel, established last month to overhaul Andersen's procedures, recommended deep changes that center on a forced split between accounting and consulting services. For their part, other Big Five firms have been cool to Volcker's ideas, which also include mandatory rotations of corporate auditors.

``I would like to see the kinds of reforms we suggested for Arthur Andersen become a benchmark for the profession generally,'' Volcker told BBC World Service Radio on Tuesday. ''There has been great resistance on the part of auditing firms to go in that direction.''

Andersen's competitors, which have actively distanced themselves from Andersen's plight, are loathe to implement changes that would deny them lucrative consulting services. They have already begun intensive lobbying to water down any industry-wide reform proposals coming out of Washington.

Andersen itself in a letter sent by its lawyers to the Department of Justice last week said its collapse would damage prospects for change.

While lambasting the government's plan to slap the firm with a felony charge for allegedly shredding Enron documents, the letter said Andersen's collapse ``would kill any possibility that the sweeping reforms proposed by Chairman Volcker will be implemented -- and with it, any chance that the accounting profession will undergo much-needed changes.''