Posted on 01/19/2002 4:33:19 AM PST by chainsaw
ANDERSEN, the accountancy firm caught in the Enron scandal, has recovered thousands of electronic files relating to the Enron audit.
The recovery of back-up files — including e-mails and duplicates of paper documents that were shredded — will help the investigation into the collapse of the Houston-based energy trading group. Andersen admitted on January 10 that individuals in the firm had disposed of a “significant but undetermined” number of electronic and paper documents relating to Enron.
David Duncan, the lead Enron audit partner, was subsequently dismissed, while three other partners have been sent on leave. Andersen said a systematic search for deleted files was continuing.
It was also revealed that Kenneth Lay, Enron’s chairman, disposed of shares worth $3.5 million (£2.4 million) only five days after being warned that Enron could “implode in a wave of accounting scandals”. Details of the share disposal, which was made in two tranches on August 20 and August 21, emerged yesterday amid a congressional inquiry into Enron’s collapse. It is already known that Mr Lay sold huge amounts of Enron stock between 1999 and July 2001 through 350 transactions.
Mr Lay collected $101.3 million through these share sales, which were completed when Enron’s stock was worth up to $86 per share. The price he originally paid for the shares in unknown. Enron’s stock is now virtually worthless.
Mr Lay’s August transactions came only five days after Sherron Watkins, an Enron vice-president, wrote to him, expressing her fears about the company’s accounting techniques. Ms Watkins was prompted to write the letter by the abrupt resignation of Jeffrey Skilling as Enron’s chief executive on August 14.
Mr Lay sent a circular e-mail to employees on August 21, the day of the final trade, saying he was working to make sure that Enron would soon have “a significantly higher stock price”. Two months later, the SEC began investigating Enron and by December 2, Enron, formerly the seventh largest company in the US, had collapsed into bankruptcy.
In other developments, Max Yzaguirre, a former executive at the energy company, resigned yesterday from the Texas Public Utility Commission. It also emerged that Enron had made $700,000 of election campaign donations to several members of the congressional committees investigating the company’s collapse. Instead of dropping out of the investigation, however, many of the Senators and Representatives have said that they will pass on the money to charity.
Senior UK accountancy figures launched a robust defence of UK auditing practices, saying standards have improved dramatically since the scandals of the early 1990s. Kieran Poynter, UK senior partner of PricewaterhouseCoopers (PwC), auditor to nearly half the FTSE 100 companies, said vetting of audit work goes much further than in the US.
Mr Poynter said: “Every now and then reviews find a case where somebody might have been careless. It doesn’t happen twice. We have a zero-tolerance approach to failures.”
Rodger Hughes, overall head of audit at PwC, said: “The worst thing a partner can do is sign a duff audit opinion. There is no greater crime.”
You know, the ones we have to vote for because to allow a third party would create "instability"?
I don't think so, but you would have to ask Rush to be sure. I think he was for letting the chips fall where they may.
That is my opinion anyway.
That's not my responsibility. But I think one thing will lead to another to verify or refute.
Vince Foster.
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