- The Washington Times - Saturday, April 27, 2002


Arthur Andersen said yesterday the government had turned down the accounting firm's proposal for a settlement of a criminal obstruction charge in the shredding of Enron documents.

"They rejected our proposal," Andersen attorney Rusty Hardin said yesterday. "So we just proceed to trial. I think we're probably through talking to the government about the case."

Mr. Hardin declined to give any details of Andersen's proposal or the government's reasons for rejecting it in a document sent Thursday night.

Justice Department spokesman Mark Corallo said only that the department had issued a response to the accounting firm.

Andersen, which is scheduled to go on trial May 6 on the obstruction charge, had sent a letter to the Justice Department Wednesday laying out its position in response to the government's request last week. Federal prosecutors had earlier offered to defer any criminal prosecution of Andersen for up to three years, requiring the Big Five accounting firm to cooperate in the investigation of Enron and to promise not to violate any laws during that period.

Andersen acknowledged massive shredding of documents and deletion of computer files related to Enron's audits last fall after the Securities and Exchange Commission began an investigation into the now-bankrupt energy-trading company. David Duncan, who was Andersen's senior auditor on the Enron account, has pleaded guilty to ordering the destruction of Enron documents and had agreed to cooperate with prosecutors.

Chicago-based Andersen has been struggling for survival as it loses clients, employees and affiliates as the result of its indictment by a federal grand jury last month.

Former Federal Reserve Chairman Paul Volcker, who has been overseeing changes at Andersen, said Thursday that his plan to turn the firm into one that does only auditing has lost support among Andersen partners.

"Loyalties have dissipated, people are looking out for their own welfare." Mr. Volcker said in an interview on CNBC. "I'm not sure that critical mass [of support] still exists. If all the other problems evaporated tomorrow, the other problems obviously are not going to evaporate tomorrow."

Andersen's efforts to sell its tax and consulting businesses, in keeping with Mr. Volcker's proposal to make it an audit-only firm, have prompted a bidding war.

No. 1 accounting firm PricewaterhouseCoopers has entered the bidding for Andersen's tax unit with an offer exceeding that of rival Deloitte & Touche, according to a person familiar with the matter. Deloitte signed a memorandum of understanding last week to acquire a significant portion of the tax business and more than 200 of Andersen's 560 tax partners.

PricewaterhouseCoopers spokesman David Nestor acknowledged that his firm is "potentially interested in parts of Andersen's practice."

Andersen spokesman Patrick Dorton said only: "Any transaction we would consider would be consistent with our plans to continue with our firm in the future."

In addition to the federal charge, the Securities and Exchange Commission is pursuing a civil investigation of Enron and Andersen.

Andersen also has been negotiating separately to settle civil lawsuits brought by Enron shareholders and creditors. Those talks broke off last week.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide