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

To: Raymond Duray who wrote (2020)	4/14/2002 5:09:46 AM
From: stockman_scott	Respond to of 3602

The tragic proportions of Andersen's downfall By Paul Merrion Crain's Chicago Business April 15, 2002 "For God's sake, let us sit upon the ground / And tell sad stories of the death of kings." From Aristotle to Shakespeare's "Richard II," we know there are tragedies and then there are Tragedies. Let us talk about the death of Andersen. The CPAs have done their damage, the lawyers are doing theirs, but it takes an English major to explicate this whole sorry mess. Andersen's downfall has all the classic elements of a Greek tragedy, except the most important one: catharsis. A great tragedy entails much more than great suffering. To begin, there must be a larger-than-life protagonist. Certainly Andersen qualifies as a tragic hero, larger than life in both size and status. A year ago, if anyone had dared predict which Big Five accounting firm might lose its reputation overnight, it wouldn't have been Andersen. And the hero's misfortune must be caused not by "vice," as Aristotle put it, "but on account of an error." When one who dares to be great has a fatal flaw, the tragic formula is that it inevitably leads to suffering, brought on by the gods or in fear of the gods. To suffer due to wrongdoing is justice, not tragedy, and while some at Andersen may fall into that category, the vast majority, especially the first 7,000 who lost their jobs last week, are innocent. Andersen's tragic mistake wasn't the decision to shred Enron Corp. documents. Every accounting firm shreds documents after every audit. Whether Andersen went too far, too late after Enron had imploded is a legal question, not the root cause of its suffering. Andersen's fatal flaw was the "original sin" of most Greek tragedies: hubris. An arrogant culture made it possible, even necessary, to accommodate a big client's most outrageous financial schemes, instead of enforcing reasonable accounting standards. A client like that created much risk, those at the top knew, but they felt that Andersen's expertise made it "manageable." If nothing else, hubris causes the tragic hero to ignore the admonitions of the gods. Andersen acted as if costly settlements over Waste Management Inc., Sunbeam Corp. and numerous other botched audits were not a warning. There must be a chorus, to comment on the hero's deepening predicament. In this case, that would be Congress, which took Andersen's paper shredding and offered it to the gods of public opinion. These gods were angry about the complex collapse of Enron and they needed a sacrifice. But when we witness a tragedy, we are supposed to undergo a discharge of our conflicting emotions, to feel some sort of catharsis. Instead, this feels like watching a car wreck caught on videotape, in slow motion. Our pity and fear, anxiety and indignation remain bottled up with Andersen's fate. We feel pity in the suspicion that the firm's greatness, and so many innocent careers, have been destroyed by a series of miscalculations, not the impartial dispensation of justice. The fear is that it could happen to any major accounting firm, or any highly visible public company, for that matter. The real lesson here may be that to disclose possible wrongdoing and cooperate with the government, as Andersen did, is a strategic mistake of the first order. If so, that truly would be tragic. ©2002 by Crain Communications Inc.

To: Raymond Duray who wrote (2020)	4/14/2002 10:24:47 PM
From: stockman_scott	Read Replies (1) \| Respond to of 3602

Enron's final, biggest error ... By DAPHNE WYSHAM April 13, 2002, 6:37PM The Houston Chronicle The biggest error Enron made did not have to do with their dubious accounting practices. Nor did it have to do with the golden parachutes they offered their departing chief executive officers, nor with their theft of employees' pensions. The biggest mistake Enron made was doing all of this on U.S. soil to Americans. In fact, Enron has been behaving abominably around the world for nearly a decade. Throughout the time it operated in developing countries, the name Enron became synonymous with scandal as its shady deals with government officials became legendary. But, as the old adage goes, "What's good for General Motors is good for America." Working under this faulty premise, government officials, rather than hold Enron accountable for their actions abroad, willingly became the pawns of this now-fallen giant, until recently the country's seventh-largest corporation. They assisted Enron as it marched into risky projects abroad. They opened up the coffers of taxpayer-backed institutions, providing more than $4 billion in U.S. government financing. U.S. officials also persuaded their counterparts in international organizations to lend Enron their assistance. Enron obtained another $3 billion from other public sources, such as the World Bank, the European Investment Bank and the United Kingdom's export credit agencies. Ironically, they used these public agencies to advocate for the privatization of power and energy sectors around the world, a policy shift that helped them and other private multinationals enter into energy and power contracts in cash-poor developing countries globally. Enron's overseas operations rewarded shareholders temporarily, but often punished the people and governments of foreign countries with price hikes and blackouts worse than what California suffered in 2001, causing social unrest and riots that were sometimes brutally repressed. For example: In the Dominican Republic, eight people were killed when police were brought in to quell riots after blackouts lasting up to 20 hours followed an Enron-initiated power price hike. Local citizens were further enraged by allegations that Enron and other foreign multinationals had purchased their public utility at a price almost $1 billion less than its actual value. The auditor: a local affiliate of Arthur Andersen. In India, police hired by the power consortium of which Enron was a part beat nonviolent protesters who challenged the $30 billion agreement -- the largest deal in Indian history -- struck between local politicians and Enron. Among those beaten were pregnant women and children dragged from their homes. The president of Guatemala tried to dissolve the Congress and declare martial law after rioting followed an Enron-maneuvered price hike. In Panama, the government promised power rates would go down by 10 percent following Enron's takeover of a local power plant. Instead, they rose by between 10 percent and 20 percent. Rioting followed suspicions of corruption and Enron's price hikes and power outages there, too. In Colombia, two politicians resigned amid accusations that one was trying to push a cut-rate deal for Enron on the state-owned power company. These allegations of corruption will taint Colombia's upcoming elections this May. While all this was occurring, the U.S. government and other public agencies continued to advocate on Enron's behalf, threatening poor countries such as Mozambique with an end to aid if they did not accept Enron's bid on a natural gas field. So linked was Enron with the U.S. government in many people's minds that they assumed, as the late Croatian strongman Franjo Tjudman did, that pleasing Enron meant pleasing the White House. For Tjudman, he hoped that compliance with an overpriced Enron contract might parlay into an array of political favors, from softer treatment at The Hague's War Crimes Tribunal to the entry of his country into the World Trade Organization. It was only when Enron's scandals began to affect Americans that these same government officials and institutions began to hold the corporation at arm's length. And it was only when Enron leadership revealed their greed on home turf that it became the biggest corporate scandal in recent U.S. history. Clearly, what's good for Enron is not good for America or for anyone else. Hopefully, Enron's demise will finally put to rest the old GM slogan and force us to come up with a new adage, one that puts the people of America -- indeed, the people of the world -- ahead of the interests of corporate America. _____________________________________ Wysham is a fellow with the Institute for Policy Studies in Washington, D.C., where she coordinates the Sustainable Energy and Economy Network. She is the co-author of a recent report, Enron's Pawns: How Public Institutions Bankrolled Enron's Globalization Game, available at www.seen.org

To: Raymond Duray who wrote (2020)	4/17/2002 7:37:00 PM
From: stockman_scott	Respond to of 3602

Enron's Vince Foster? villagevoice.com BAXTER DEATH LOOKS A LOT LIKE FOSTER'S aim.org

To: Raymond Duray who wrote (2020)	4/18/2002 4:35:36 PM
From: stockman_scott	Read Replies (1) \| Respond to of 3602

Andersen Breakup Accelerates By Greg Cresci and C. Bryson Hull Thursday April 18, 3:40 pm Eastern Time NEW YORK/HOUSTON (Reuters) - Ailing accounting giant Andersen , crippled by its role in the Enron Corp. scandal and scrambling to settle lawsuits, is unraveling fast as U.S. partners consider joining their overseas colleagues in bolting the firm. Rival firm KPMG , which already has courted Andersen's international staff, has a tentative deal to hire 150 partners and 2,000 employees from Andersen offices across the United States, sources familiar with the situation said. The Washington Post reported on Wednesday more than 80 percent of Andersen's 1,700 U.S. partners have signed nonbinding letters of intent to pursue positions at other firms or in new companies. Those defections, if they occur, would deprive Andersen of auditors at a time when its main strategy is to retool itself into what it has called ``the auditing firm of the future,'' centered on an elite corps of auditors whose only job is to review the books of corporate clients. That vision, championed by former Federal Reserve Chairman Paul Volcker, means selling off lucrative consulting and tax advisory businesses. Volcker was brought in earlier this year to overhaul the Big Five accounting firm. ``I don't hold out a lot of hope that the firm of the future is going to be a particularly successful firm,'' said Robert Willens, an analyst at Lehman Brothers. ``Tax partners and tax personnel are an integral part of the audit team. I don't see how you can perform an audit without having tax expertise.'' Andersen and KPMG spokesmen declined comment. SPLINTERS AND LAWSUITS Andersen affiliates overseas still were cutting deals on their own on Thursday, as three more European units neared merger deals with rival firms. Meanwhile, high stakes legal wrangling in the United States approached a critical point. The difficulties of the 89-year-old Chicago firm have grown with dizzying speed since its criminal indictment last month on an obstruction of justice charge related to its shredding of Enron (Other OTC:ENRNQ.PK - news) documents. In Germany, Ernst & Young said it was in merger talks with Andersen's local unit, going head to head with KPMG, which just a week ago said it hoped to ink a deal there with Andersen. Andersen's Belgian arm said it would merge with Deloitte & Touche while its Austrian unit said it was in talks with rivals. The merger deals came as Andersen's negotiations with its opponents in civil and criminal cases near critical junctures where possible settlements may be at risk, sources said. Talks between the accounting firm and the U.S. Justice Department have slowed as Andersen starts to think its weak financial health makes the deal on the table less tenable, the sources said. Andersen has lost some 200 audit clients so far this year, including companies such as Delta Air Lines and Halliburton Co., pinching much-needed revenue. Other legal sources said a second day of negotiations, in a major class action suit stemming from Enron's collapse, ended without a deal on Wednesday. Those talks, conducted in New York under the supervision of a court-appointed mediator, began to break up after beginning with what some called a hopeful note. It was not clear whether the talks were off completely, the sources said. The negotiations to settle the felony obstruction of justice charge, described as fluid, are getting to a point where a deal must emerge soon or all bets may be off, the sources said. ``Everybody's talking...That doesn't mean that we're heading toward anything,'' said one source close to Andersen. A Justice Department spokesman declined comment. Andersen wants simultaneous settlements with the Justice Department, the U.S. Securities and Exchange Commission and the plaintiff's lawyers suing it in the Enron class action suit. ``They almost all...have to be like dominoes that line up, and they all fall at once or they don't,'' a legal source said. PARTNERS Andersen's remaining partners want a clearer picture of what their post-settlement firm will look like. The firm recently announced it was cutting 7,000 jobs, or more than a quarter of its U.S. staff. And Andersen's U.K. unit on Wednesday announced plans to slash 1,500 jobs. With Andersen's reach severely curtailed by defections spanning the globe, and future business limited to audit-only functions unlikely to include tax services, many partners might decide it's better to go elsewhere. ``These people all know what an accounting firm must offer in the way of even minimal services to a client in order to be competitive,'' said Lehman Brothers' Willens. ``I think Andersen's domestic auditors realize that (audit-only) is not a viable model for an accounting firm. It just isn't.''

To: Raymond Duray who wrote (2020)	4/23/2002 4:53:54 AM
From: stockman_scott	Respond to of 3602

Sins of Enron will be hard to overcome BY SUSAN TOMPOR DETROIT FREE PRESS COLUMNIST April 23, 2002 The one thing that makes stock markets work is trust. Trust that the powers in place -- Wall Street analysts, accountants, corporate management, boards of directors, government regulators -- can somehow ferret out companies that are bad apples. The system fell apart, big time, with Enron Corp. And now we're worried that we could be looking at a whole orchard gone bad. Enron's collapse "has raised troubling questions about our sense of economic security," U.S. Sen. Carl Levin, D-Mich., said Monday. "People want to know how it happened. They want to know how so many Enron executives could walk away from the disaster they created with tens of millions of dollars in their pockets," Levin said in a speech to the Economic Club of Detroit. Levin, who leads the Senate permanent subcommittee on investigations, is part of the team in Congress dissecting the Enron debacle. Monday, he unveiled a Shareholders Bill of Rights a proposal designed to protect shareholders and workers from manipulation and deception involving investors. Enron board members are to testify May 7. Enron, the world's largest energy trader with 20,000 employees, tumbled into the biggest corporate bankruptcy in U.S. history Dec. 2. Enron owes more than $100 billion. Workers lost their jobs, and retirement money that was invested in now basically worthless Enron stock. While Enron's downfall has features unique to Enron, its bookkeeping tricks have raised questions about the accounting practices at other corporations. Changing stock options The fallout, Levin said, demands some government action. Levin already has introduced a bill that would make stock options less attractive. It would strip companies of generous tax breaks they receive when stock options are exercised unless the companies deduct the cost of options on their income statements. Levin's plans include: A change that could pave the way for some shareholders to call for the removal of wayward directors on corporate boards. The Securities and Exchange Commission now allows companies to stop shareholder activists. Levin is proposing that the SEC not stand in the way of proposals that call for removing or replacing a director if a state's law permits such proposals. Requiring companies to immediately disclose company loans to directors and officers. Requiring shareholders to approve any stock option compensation plan that will not be shown on financial statements as an expense. Strengthening the SEC, "so that this critical watchdog agency isn't hopelessly out-gunned by those companies it oversees." It is a tricky path. Corporate managers won't easily give up freedoms or stock options. Wisely, Levin admitted that more new laws will never provide the full answer. "That's because what happened at Enron wasn't just a failure of regulations and laws," Levin said. "It was a failure of corporate culture, a failure of values, a failure of heart." And that's what is most unsettling to investors. Whom can you trust? Contact SUSAN TOMPOR at 313-222-8876 or tompor@freepress.com freep.com

To: Raymond Duray who wrote (2020)	5/10/2002 1:34:07 AM
From: stockman_scott	Respond to of 3602

Consumer and Citizens Groups Demand Bush Remove Army Secretary White Groups Call On White House to Restore Integrity to Army Post commondreams.org WASHINGTON - May 9 - In light of mounting evidence calling into question former Enron Executive Thomas White's credibility and conduct as Army Secretary, a group of national consumer and citizens groups today call upon President George W. Bush to take responsibility for his appointment and remove him from office. Led by American Family Voices (AFV), the groups cited numerous conflicts of interest, questionable divesting practices, deceptive responses to Congressional inquiries, and pending FBI and DOD investigations as ample cause for his removal. Joining AFV with their concerns were Campaign for America's Future, and USAction. White, an 11-year Enron executive, had previously headed Enron Energy Services before being appointed Army Secretary by Bush last year. White's department has been accused of misrepresenting earnings and misleading investors, contributing directly to the company's downfall. As Secretary, White continued to hold Enron stock and collect an Enron pension, even after promising legislators that he would divest himself completely. "Mr. White has displayed an egregious lack of ethics while holding a public office," said William McNary, President of US Action. "The honorable thing to do would be to return the profits he made back to the disenfranchised workers who were not privy to the same information Secretary White was." "Secretary White ran a Ponzi scheme at Enron, and walked away with millions while misleading investors and his own employees," said Robert Borosage, co-director of Campaign for America's Future. "He is utterly incapable of representing the core military ethic of men and mission before self. It is time for the president to show that personal responsibility applies to members of his own administration." Collectively, the groups represent millions of working families across the country. Each of the groups have been actively working following the collapse of Enron to make certain that the voice of the middle class is heard. ______________________________________ Campaign for America's Future is a center of progressive ideas and organizing, joining citizen activists and policy experts to challenge the conservative drift of American politics, and to discuss and debate a new vision of an economy and a future that works for working families. USAction is a grassroots consumer organization dedicated to winning social and economic justice for all. American Family Voices (AFV) is an issue advocacy organization designed to focus attention on the economic and family issues most important to the quality of middle class working families' lives. AFV members include advocates for consumer, healthcare, education, children, seniors, civil rights and labor issues.