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

To: Glenn Petersen who wrote (2744)	8/30/2003 3:09:32 PM
From: Glenn Petersen	Respond to of 3602

More on Polaroid in this week's Business Week (no link - registration required) UpFront Quid Pro Quo Fuzzy Focus on Polaroid's Auction Buried in a 106-page report by an accountant who spent six months investigating charges of fraud related to the October 2001, bankruptcy of Polaroid is an unanswered question: Did top execs favor the buyer, One Equity Partners, in exchange for jobs and shares in the company? On Aug. 22, court-appointed examiner Perry Mandarino issued his report, finding that "it appears around the time of the auction [of Polaroid assets] at the latest," OEP planned to give Polaroid managers shares in the new company. But the investigation was inconclusive. "No one could remember when it was first discussed," says Mandarino. Such a relationship would be fraud if it occurred before the auction, says UCLA law professor Lynn LoPucki. Shareholders aren't ready to accept the report's findings. On Aug. 26, investors filed a lawsuit claiming the company's auditors, KPMG, and three top execs misled investors. "Clearly, we think a fraud has occurred," says Stephen Morgan, a Polaroid investor. KPMG says it hasn't received the suit and couldn't comment. Eight former Polaroid execs, including the CFO, own about 4% of the new company. Polaroid isn't named in the suit but says the auditor's report resolves any questions surrounding its $225 million sale. A spokesman for OEP, a private-equity arm of Bank One, says managers typically get a stake in the new company, and that talks started months after the sale. --Faith Arner