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To: T L Comiskey who wrote (49211)	4/1/2002 1:23:39 AM
From: stockman_scott	Respond to of 65232

Is Andersen furor letting Enron off the hook? By David Greising The Chicago Tribune Published Sunday March 31, 2002 It was quite a week at Firm Woebegone, better known as Andersen. The CEO quit. The former chairman of the Federal Reserve wants to step in. Groups of partners prepared to bail out. And a few dozen associates in New York braved a drenching rain to remind us that "We are Andersen." The government doesn't like all the sloganeering and demonstrating. It warned late last week that the protests might amount to witness intimidation and jury tampering in the matter of the United States vs. Andersen. Simmer down, gumshoes. No pinstriped protesting will sway any jury when "The Andersen 2,300" have their day in court. "The Andersen 2,300?" you ask. The feds made me call them that. No individual is named in the lone obstruction-of-justice charge that could destroy Andersen. All stand accused. The whole firm stands to pay the ultimate price. The Andersen 2,300 fits. But hold on. Wasn't there another outfit involved in the Andersen mess? Wasn't there some company that got Andersen into all this trouble in the first place? It's coming back to me now. A crooked "E." Lots of political cash. Big energy trader. Dense balance sheet. Enron. That's right. Enron. Remember Enron? If you do, good for you. You're apparently one step ahead of the Justice Department, the Securities and Exchange Commission, much of Congress and any other body of power and enforcement in the United States. Andersen has been charged and, in a sense, convicted already. The criminal obstruction-of-justice complaint may put the firm out of business, no matter how hard former Fed Chairman Paul Volcker tries to save it. But what about Enron? It seems to me that Enron was involved in this whole mess somehow. It's coming back to me now. A congressional hearing room. Late January. Stunned lawmakers are learning that an Enron contractor named Shredco is still destroying documents--nearly three months after an SEC investigation began. But still no charges against Enron. A former Enron executive, hair combed back. Smooth talker. Oh yes. Former CEO Jeff Skilling testifying that he knew nothing about shady deals, conflicts of interest and executive enrichment. Enron, he insisted, was in great shape the day he left--two months before the earnings restatement that caused Enron's collapse. Other witnesses stoutly refute Skilling. A congressman raises the prospect of a perjury case against him. But still no Enron charges. Executives dumping their stock while urging employees to buy it. Ignoring Andersen's advice and publishing misleading financial statements. Locking employees' retirement savings into Enron stock before disclosing the deadly earnings restatement. But still no Enron charges. Justice is supposed to be swift. Experience tells us it isn't always so. But justice is supposed to be fair. And it's hardly even-handed that a rough frontier justice could come down so quickly on The Andersen 2,300 while Enron executives have yet to hear a knock at the door. Andersen has been brought to the brink of demise by an indictment stemming from an admitted frenzy of document destruction. Enron and its former officials won't admit anything. And the government so far has not demanded that they answer for any of it. There are those who put the darkest spin on this incongruous picture. They say politics is behind it. That Enron's political money, its executives' close ties to the Bush administration, its involvement in government energy policy and market deregulation all are still paying dividends. I don't buy that. Not yet anyway. But it's a shame that Andersen has been offered up to the TV cameras and the courts while Enron has become the company whose name must not be uttered. Does anyone in the Bush administration--from the president to Treasury Secretary Paul O'Neill to Atty. Gen. John Ashcroft to SEC Chairman Harvey Pitt--even know how to pronounce the word? It's time for some arm of justice to put Enron back in the news. ---------- Contact: dgreising@tribune.com Copyright © 2002, Chicago Tribune

To: T L Comiskey who wrote (49211)	4/1/2002 3:33:36 AM
From: stockman_scott	Respond to of 65232

Army secretary says he'll resign if Enron investigation becomes a distraction By JOHN J. LUMPKIN Associated Press Writer WASHINGTON (AP) -- Army Secretary Thomas White says he will give up his post should the federal investigation into his previous employer, Enron Corp., pull him too much from his military duties during the war on terror. "I thought I could do something good for soldiers and their families," White said Wednesday in an interview with reporters. "That is my focus. If I ever get to a point where that's no longer possible, it doesn't make any sense to stay when somebody else could do a better job." The former Enron executive said he is complying with requests for documents from the Justice Department, which is investigating the company's activities. "I'm a big boy. I was in it," White said. "I'm not a victim. I'm not a perpetrator, either." He said he is turning over to the Defense Department "a bunch" of military and personal documents relating to Enron. The Pentagon will supply the papers to Justice Department investigators. It's unclear if the papers include documents related to White's role, as head of the Enron subsidiary Enron Energy Services, in a 1999 deal in which the company won a $25 million, 10-year contract to provide utility services to Fort Hamilton, an Army base in Brooklyn, New York City. White said he would resign if the Enron investigation should take too much of his time or if he should feel his role in the matter caused troops to lose confidence in his leadership. He denied wrongdoing in his dealings at Enron. He said he was as surprised as the rest of the country by the energy trading company's collapse in December and the subsequent allegations of massive fraud. White said he has sold all of his interests in Enron, as required by his Army post. He said he retains membership in an annuity fund for Enron retirees. The fund has paid nothing since Enron's collapse, however, and White has joined other retirees in filing a claim in the company's bankruptcy. White acknowledged frequent contacts with Enron officials during the company's collapse but said none provided him insider information that affected his stock sales. He reiterated earlier statements that no one at Enron asked him to use his influence to help the company, and he had not done so. He said virtually all his conversations with former Enron colleagues "would have involved some comment or discussion relating in at least a general way to Enron's financial condition." White's critics have said they want to know whether his conversations with Enron officials prompted him to finish his stock sales quickly, before Enron's shares hit bottom. Enron's stock hit a low of 26 cents by the end of November, White's deadline to sell. White made about $12 million from selling his Enron shares, the last of which he sold Oct. 30 at $12.86 a share. biz.yahoo.com

To: T L Comiskey who wrote (49211)	4/1/2002 7:43:51 PM
From: stockman_scott	Read Replies (1) \| Respond to of 65232

Should Accountants Go To Jail...? slate.msn.com

To: T L Comiskey who wrote (49211)	4/1/2002 10:18:23 PM
From: stockman_scott	Respond to of 65232

Two Takes on Enron Editorial The Washington Post washingtonpost.com Monday, April 1, 2002; Page A14 LAST TUESDAY Alan Greenspan, the Fed chairman, traced the decline in the quality of financial reporting symbolized by Enron to a variety of subtle causes. Since the 1980s, tax and regulatory incentives have discouraged firms from paying out cash dividends, driving investors to value shares by focusing instead on inherently subjective earnings numbers. This focus in turn has created an incentive for managers to manipulate earnings in order to support their stock prices. More recently the Internet revolution generated talk of shifting business paradigms, so that no firm's future seemed predictable. Confused investors reacted wildly to small changes in earnings, further increasing managers' temptation to massage the numbers. The question is what follows from these observations. In Mr. Greenspan's view, these disturbing shifts are to a large extent self-correcting: The Internet bubble has burst, and since Enron's collapse firms have come to find that suspect financial reporting will draw swift punishment from the markets. Mr. Greenspan therefore cautions against excessive regulatory reaction to Enron, though he does endorse measures to make chief executives personally responsible for the quality of corporate reports and is wonderfully robust in calling for the cost of employee share options to be reflected in firms' earnings statements. The Fed chairman's caution is fair: The reaction to a scandal is often overreaction. Yet his hands-off attitude begs some serious questions. How can the market discipline firms for earnings manipulation when the whole point of such manipulation is that it happens secretly -- precisely to mislead the market? Isn't it likely that investors will unjustly dump entire categories of firms that raise alarm bells -- for example, all that have made acquisitions, because acquisitions are a notorious source of creative accounting -- rather than distinguishing between good firms and bad ones? And isn't this inimical to stock-market capitalism, in which investors need reliable information about companies in order to allocate scarce savings to the best ones? Curiously, just as Mr. Greenspan has sounded a cautionary note on reform, the leading exponent of caution is sounding more determined. On March 21 Harvey Pitt, chairman of the Securities and Exchange Commission, presented testimony in the Senate that represents a big improvement on his position at the start of the year. Mr. Pitt's premise, unlike Mr. Greenspan's, is that investors aren't getting good enough information about the companies they own and that reform is needed. Mr. Pitt is newly forthright about the Financial Accounting Standards Board, which writes accounting rules that too often reflect lobbying by accountants and corporate managers. "The SEC has historically abdicated far too much of its obligation," he said. "We plan to take a more active role to ensure that standards are implemented that benefit markets and investors." In particular, Mr. Pitt promised to strengthen the board's financial independence from auditing firms, and to push it toward " principle-based standards" -- in contrast, presumably, to lobbying-based ones. The SEC chairman also has moved in other ways. He now says that auditing firms must ban the practice of compensating audit partners according to the amount of consulting services sold to their clients -- a recommendation that falls short of banning the consulting outright but that is nonetheless useful. He is also explicit that his proposed new auditor-oversight body should be financially independent and secure so that it is not subject to blackmail from the auditors it is meant to discipline. Finally, Mr. Pitt has embraced the idea of making chief executives more responsible for accurate financial disclosure and wants to force company officers to report stock sales more promptly. This last idea would prevent chief executives from urging investors to buy their firms' stock while they dump it in secret. Mr. Pitt's activist outlook seems more appropriate to the Enron challenge than Mr. Greenspan's cautious one. But questions remain about Mr. Pitt's position. The SEC chairman continues to emphasize a reform agenda that he embraced before the Enron scandal, which would require firms to disclose more qualitative data to investors. This may be useful, but it must not distract from the more fundamental challenge of improving the disclosures' accuracy. The Enron scandal has drawn attention to the lax climate that pervades financial reporting: Accounting rules are marred by egregious loopholes, the oversight of auditors is weak and auditors have a strong financial incentive to tolerate dishonest numbers. The market cannot fix these problems, whatever Mr. Greenspan says. And disclosing more data is unhelpful until disclosures are honest, whatever Mr. Pitt's attachment to his pre-Enron agenda. © 2002 The Washington Post Company