Enron Was Economic–Not Accounting–Failure, Says Andersen CEO

But audit firm's risk manager said to confirm existence of document-destruction memo. Also: Tyco talks, Moody's speeds up, Connecticut investigates (Enron).

Why did Greenspan even attend the function? A press aide to the Fed Chairman was quoting as saying that Greenspan had committed a year earlier to former Secretary of State Jim Baker to accept the honor. The James A. Baker Institute of Public Affairs awards the prize, which is funded by Enron.

Besides, Greenspan appears to have gotten his shots in at Enron. In a Q&A during the ceremony, a student apparently asked the Central Banker how new college graduates can succeed in a difficult job market. “The best chance you have of making a big success in this world,” Greenspan reportedly responded, “is to decide from square one that you’re going to do it ethically.”

N’even More on Enron

In other news about the Enron scandal:

– On Friday, it was reported that Enron Chairman Kenneth Lay told employees on Sept. 26 that the company’s stock was “an incredible bargain.” A few weeks later, Enron collapsed, making the stock less of a bargain.

In reply to an employee question on Enron’s ”ethink” intranet site, Lay reportedly wrote: “My personal belief is that Enron stock is an incredible bargain at current prices and we will look back a couple of years from now and see the great opportunity that we currently have.” Thanks Ken. And you have how much set aside for retirement?

– SEC chairman Harvey Pitt said on ABC’s “This Week” that his agency doesn’t have enough money or manpower to directly police the accounting industry in the wake of Enron Corp.’s collapse. Last week, however, Pitt called for the creation of a new regulatory body to oversee the accounting profession.

– Vice President Dick Cheney spoke to Indian government officials last year about Enron’s investment in a $2.9 billion power project, Bush administration officials said on Friday. The White House said Cheney’s involvement was justified to minimize the exposure of American taxpayers to potential losses.

– Andersen has received tens of millions of dollars in contracts with the federal government. The Big Five firm’s clients include the Justice Department, the FBI and the Pentagon. Total government bookings through Q3 of fiscal 2001? Almost $36 million, according to an analysis by the AP.

Rival KPMG LLP was the biggest government auditor, with $165 million in contracts, followed by PricewaterhouseCoopers LLP, $129 million. Ernst & Young LLP had $6 million in government contracts. Deloitte & Touche only received $357,000 worth of contracts.

The General Services Administration, which oversees many of the contracts for the rest of the government, reported $34.4 million in contracts with Andersen last year, according to the AP.


– On Friday, the SEC suspended trading of New Energy Corp. through Feb. 1. The suspension was triggered by concerns about New Energy’s financial disclosures. The SEC said questions were raised about the “adequacy and accuracy of information concerning the value of certain power generation contracts, the existence and size of certain purchase orders for solar chips and its partner’s relationship with the Los Angeles Department of Water and Power.”

– Moody’s is mulling changes in how it rates companies, according to reports. The changes could cause ratings to rise or fall faster. That, in turn, would likely affect companies’ ability to raise money. “We are considering a number of measures to improve the timeliness of rating actions, in response to criticism from the market about that timeliness,” Debra Perry, Moody’s senior managing director in corporate and public finance, told Reuters.

– Tyco International, whose accounting practices have been regularly questioned by critics, will hold a special analyst meeting on Tuesday. The agenda? “To respond to the continuing stream of baseless rumors that are depressing our stock, and to discuss ways in which we plan to enhance shareholder and debtholder value,” company management said in a statement.

– Goodyear Tire & Rubber Co.’s debt rating was cut to junk status on Friday by S&P, which said the largest U.S. tire maker is not cutting costs fast enough. Hey, at least their tires don’t blow up.


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