- The Washington Times - Wednesday, August 28, 2002

HOUSTON (AP) The network of accounting firms outside the United States linked to Arthur Andersen LLP will pay $60 million in the first settlement of lawsuits stemming from the collapse of Enron Corp., sources familiar with the agreement said.
Andersen Worldwide SC will pay $40 million to resolve suits filed by Enron investors and workers over the accounting firm's role in Enron's demise, a spokesman for the lead plaintiff in the case said yesterday. The firm also will hand over $20 million to Enron's bankruptcy creditors, the sources said.
The settlement, an outgrowth of consolidated suits filed in federal court in Houston earlier this year, is a fraction of the $29 billion in losses that shareholders and former workers say they incurred. The energy trader filed for bankruptcy Dec. 2 after losing $68 billion in market value.
"The lawyers in this case are looking at this $60 million settlement as pocket change," said Jacob Frenkel, a Washington lawyer and a former U.S. Securities and Exchange Commission senior counsel. "The big catch is the billions of dollars in recoveries the investors are seeking from Enron's lenders and lawyers."
Andersen auditors are accused of contributing to fraud at Enron that included hiding $1 billion in losses in off-the-books partnerships.
A spokesman for Andersen's U.S. unit declined to comment and said Andersen Worldwide officials weren't available to comment on the settlement.
Arthur Andersen LLP, the Chicago-based U.S. arm of the auditing firm, isn't a party to the agreement, the sources said.
The U.S. unit had offered $750 million earlier this year to settle its Enron claims, an amount later reduced to $300 million as the accounting firm's assets dwindled. Settlement talks collapsed by May amid competing claims for the money.
Under the settlement announced yesterday, Enron shareholders and workers will receive $25 million, officials of the University of California's Board of Regents said in a release. The remaining $15 million will be put in a fund to finance the continuing litigation against Enron executives, Andersen's U.S. auditors and the energy trader's former investment bankers and lawyers, officials said. None of the money will be used to pay attorney fees.
The California regents, who lost $145 million in pension funds invested in Enron stock, are the lead plaintiffs in the class-action suit against Enron executives and Andersen auditors.
"The substantial settlement is a favorable result for the class in light of the limited role of the non-U.S. Andersen entities, and represents one of the more substantial securities recoveries from an accounting firm," James E. Holst, the regents' general counsel, said in the release.

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