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

To: ksuave who wrote (4620)	10/24/2002 1:41:26 PM
From: Mephisto	Respond to of 5185

Muzzling the SEC PRESIDENT IS IRRESPONSIBLY TRYING TO CUT AGENCY'S BUDGET BY 25%, WHICH WOULD CRIPPLE FIGHT AGAINST CORPORATE FRAUD Posted on Wed, Oct. 23, 2002 bayarea.com IT was always a little hard to believe that President Bush really meant it when he vowed to get tough on corporate crime. He first tried to derail a sweeping corporate reform law in the Senate and threw his weight behind it only after a sudden rash of corporate scandals backed him into a political corner. So it's not surprising that Bush now is trying to chip away at that law. He's using the oldest trick in the politician's book: cutting from the budget money needed to enforce the law. That's irresponsible. Bush is trying to downsize by more than a quarter the budget for the Securities and Exchange Commission authorized by the Sarbanes-Oxley Act of 2002, the tough corporate reform law enacted last summer. The SEC, whose job is to police the financial markets, has long been underfunded. During much of the 1990s, as investors jumped into the market in unprecedented numbers, Congress doled out meager budget increases that barely covered raises for the SEC's overworked staff. Under pressure from the generous and politically powerful accounting industry, Congress repeatedly threatened the SEC with outright budget cuts unless it became more business-friendly. Lacking resources and political backing, securities cops were left unable to police crimes they knew were taking place. It's no wonder that corporate criminals schemed to defraud investors without fear of getting caught.

To: ksuave who wrote (4620)	10/24/2002 1:44:51 PM
From: Mephisto	Respond to of 5185

Andersen Gets Five Years, Fined $500,000 Wed Oct 16, 6:09 PM ET story.news.yahoo.com. By C. Bryson Hull HOUSTON (Reuters) - A federal judge fined accounting firm Andersen $500,000 on Wednesday and sentenced it to five years probation for obstructing justice in a probe of client Enron, a hollow punishment as the auditor is all but defunct. C.E. Andrews, an Andersen director, represented the company that once was considered the paragon of accounting integrity before its disintegration. Andersen paid the fine, and said it would appeal the obstruction of justice conviction next week. "We will go to our grave saying we are not guilty," said lawyer Rusty Hardin, who represented the company in the federal trial. The jury heard five weeks of testimony and deliberated for nine days before rendering its verdict on June 15. The company now employs less than 1,000 people, down from 85,000 worldwide before its rapid demise earlier this year. The sentencing comes exactly a year after Enron Corp. (ENRNQ.PK) released a dismal third-quarter earnings report that sparked its rapid spiral into bankruptcy and harsh scrutiny of U.S. corporate accounting practices. Though Andersen (ANDR.UL) was charged after admitting it shredded hundreds of Enron audits records, jurors decided the 90-year-old Chicago firm was guilty because in-house lawyer Nancy Temple suggested removing her name from a memo recounting internal discussions of the flawed earnings report. Judge Melinda Harmon on Wednesday handed down the maximum sentence. "I believe a message must be sent to the auditing community that the destruction of documents will not be tolerated while an investigation is ongoing," Harmon said. The judge made note of the fact that just a few months before the events involving Enron, Andersen had signed an agreement with federal regulators that it would not participate in accounting fraud again. She was referred to massive fraud at trash hauler Waste Management Inc. (NYSE:WMI - news) Since it is a corporate conviction, no one will serve jail time. But the firm, which keeps a minimal corporate structure primarily to settle about 90 lawsuits, was forced to pay the fine. The conviction meant Andersen could no longer audit publicly traded companies, but it was by then a moot point since the indictment had caused nearly all of the firm's publicly traded clients to leave. Andersen lawyers have said the appeal will focus on Harmon's jury instructions that appeared to break a lengthy deadlock. It would also focus on Harmon's admission of prosecution evidence about Andersen's problems with the SEC involving clients Waste Management and appliance maker Sunbeam Corp. In January, Andersen admitted it shredded or otherwise destroyed thousands of records involving its work for Enron. Andersen fired lead Enron audit partner David Duncan and began trying cut a deal with the SEC and the U.S. Justice Department (news - web sites). The talks subsequently fell apart, and Andersen was indicted in March. The firm called the indictment a death sentence, and that prophesy rang true as more than 700 clients abandoned it in the ensuing months. Duncan in April pleaded guilty to obstruction of justice and agreed to serve as the prosecution's key witness in the trial, effectively cutting off a second round of plea talks. He still awaits sentencing. Email Story story.news.yahoo.com.