- The Washington Times - Monday, October 7, 2002

The Securities and Exchange Commission and Wall Street's system of informally policing big corporations failed in their duty to detect the impending accounting failure at Enron, a Senate panel found in a report to be released today.
The Senate Governmental Affairs Committee, which has investigated the role of government and industry watchdogs in Enron's stunning collapse since early this summer, said the oversight system must be tighter.
It said the oversight failures included financial analysts, credit-rating agencies and auditors as well as the SEC.
Panel spokeswoman Leslie Phillips said recently that committee investigators were continuing to examine the documents.
The report said the SEC staff failed to review Enron's earlier financial reports filed with the agency. Had they done so, it said, "they would have had an opportunity to uncover some of the problems with the company's financial practices that appear to have been signaled in those documents."
In addition, the report noted, the market watchdog agency made earlier decisions allowing Enron to engage in certain accounting practices and exempting the energy-trading company from some federal requirements.
"The leeway afforded Enron by these determinations in certain cases appears in fact to have been abused by the company in ways that ultimately played a role in Enron's collapse," the report says.
SEC spokesmen couldn't be reached for comment last night. They have previously noted that the lack of review of Enron's financial filings and exemptions for the company occurred under the Clinton administration.
Houston-based Enron slid into one of the biggest corporate bankruptcies in U.S. history last December, toppled by a complex web of thousands of partnerships used to hide some $1 billion in debt from the SEC and shareholders.

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