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

To: stockman_scott who wrote (2132)	5/30/2002 10:39:51 AM
From: The Duke of URL©	Respond to of 3602

Haven't you ever considered it was a little strange that the Bush Republicans were brought to power with "Texas Oil Money" and the fact that Texas has had NO oil since about 1982?

To: stockman_scott who wrote (2132)	5/30/2002 10:59:40 AM
From: H James Morris	Read Replies (1) \| Respond to of 3602

Scott, as I've mentioned on the AMZN thread I've been short Adelphia for quite some time, and Adelphia is my own cable company. >>May 30, 2002 NEW YORK – Deloitte & Touche LLP has been sued by Adelphia Communications Corp. shareholders because the auditor should have known about undisclosed debt, lawyers said. Deloitte also is being investigated by the Securities and Exchange Commission, The New York Times reported. At least two of the more than a dozen shareholder lawsuits filed against Adelphia list New York-based Deloitte as a co-defendant. The SEC has started an inquiry into Deloitte's role as Adelphia's auditor, the Times reported. The SEC and grand juries in two states are investigating Adelphia's more than $3 billion in loans to partnerships controlled by the family of company founder John Rigas. The company's shares have fallen more than 90 percent since March 26, when Adelphia disclosed the loans. Deloitte should have required the company to record the loans because it audited Adelphia and the Rigas partnerships, lawyers said. "Deloitte signed off on financial statements that did not reflect the condition of the company," said Fred Isquith, a New York lawyer that represents shareholders in one of the suits. "Deloitte's opinion was reckless." Isquith said damages sought in the case may exceed $1 billion. Deloitte was paid $3.4 million in fees by Adelphia in 2000, including $1.3 million for audit work. Adelphia delayed filing its 2001 annual report to investigate the loans. Deloitte is in an especially precarious position, analysts said, because it appears that Deloitte not only acted as the accountant for Adelphia but also was the auditor for the Rigas-controlled entities. In one of the most significant disclosures made last week by Adelphia in a filing with the SEC, it seems that Deloitte never informed Adelphia's audit committee that the family was using the company's credit lines to buy Adelphia stock. The latest trouble for Deloitte comes just as its reputation was beginning to top the Big Four firms that dominate the auditing business for large companies after Arthur Andersen LLP was indicted on a charge of obstruction of justice for destroying documents related to Enron. The developments with Deloitte come as dozens of lawsuits have been brought against Andersen by Enron shareholders and the scrutiny of accountants has never been higher. "The timing is not good," said Arthur W. Bowman, editor of Bowman's Accounting Report. "The Andersen situation has just opened the doors for lawsuits. And Deloitte was looking pretty clean in the last five or six months." A spokeswoman for Deloitte declined to comment on the SEC inquiry or its role as Adelphia's auditor. Like Andersen, which agreed earlier this month to pay $217 million to settle a fraud case in Arizona, Deloitte had an earlier accounting scandal to fight. Unlike Andersen, it has been unable to reach resolution in the case, now seven years old, one that brought it unwanted international attention. Deloitte was an auditor for Barings Bank, the oldest investment bank in Britain, which was brought down by the rogue trader Nicholas W. Leeson in 1995. In that case, Leeson, an options trader in Singapore, embarked on a secret trading spree that left the bank facing fatal losses of $1.3 billion. As one of the bank's auditors, Deloitte was sued by bondholders for $300 million, accusing it of negligence for not properly identifying the rogue trades. While Barings other auditor, Coopers & Lybrand, which merged to become PricewaterhouseCoopers, settled its case with the bondholders for $95 million Deloitte continues to defend. If it is any indication of how Deloitte might fare against Adelphia shareholders and bondholders in court in the United States, the firm does not appear to be winning the battle in England, where Deloitte's lawyers have been trying to have the case dismissed for years and have spent nearly $40 million on its defense over the years, a vast amount even by English standards. A British judge recently moved to begin a full trial after holding a six-week mini-trial where evidence was heard. Now, Deloitte could be on the hook for $300 million or more and the bondholders' legal expenses if it loses. As for its role in Adelphia's questionable dealings with the Rigas family, it is unclear how much Deloitte knew about the arrangements or if it thought they were material enough to advise disclosing them. People close to Adelphia's special committee of independent directors suggest that Deloitte never advised them of the situation until this February. Copyright 2002 Union-Tribune Publishing Co.