The Enron Fiasco
The ClubHouse: Archives: The Enron Fiasco
Labmouse | Thursday, January 17, 2002 - 09:48 am   The American people are so quick to forgive and forget. How come no one ever mentions the Saving and Loan scandal of the 1980s? Millions of people lost billions of dollars. Accounting and Law firms made millions and millions on the final audits. They were billing out $1.00 per page to xerox documents. Yes...$1.00 per page. Retired workers lost their life savings. Everyone will soon forget Enron, too. Except those who lost everything. |
Highlander | Thursday, January 17, 2002 - 10:29 am   Didnt forget the Savings and Loan and the Keating Five, Jusge ITO judge in that case. Senator McCain the big pro campaign finance reformer was in pretty deep in that one as well as the current president's brother Neil bush. John Glenn was also involved. |
Twiggyish | Thursday, January 17, 2002 - 11:34 am   Funny how we never hear about Neil. |
Labmouse | Thursday, January 17, 2002 - 11:41 am   The mantra of the TV analysts after September 11th was "Follow the money...it will lead to the culprits." In the Enron debacle, "following the money", will somehow inevitably lead to lower echelon scapegoats. It will be interesting to see how justice for this case works in Texas. This is a state where 20 years ago you could be sentenced to life in prison for small quantity drug possession. The "perps" in this fiasco will probably "walk". |
Misslibra | Thursday, January 17, 2002 - 12:15 pm   I think when Enron called and told the Bush administration, that this was coming, they should of did something to prevent this from happening. Maybe the people that no longer have their jobs and money right now would have them. And I hate to see this case tied up in the courts forever using tax payer's money. They should make all of those people at the top who walked away with lots of money give it back to the people who lost their money and wasn't allow to sell their stocks before the company crashed. And the Vice President needs to come out of hiding, since he had a lot of contact with these people during the time the company was going down. It would seem to me the he and the President would of did everything in their power to try and save these people from all of this. Bush has a lot of things on his plate right now, but he knew what was going down, and Dick needs to come out, come out, where ever you are!! |
Oregonfire | Thursday, January 17, 2002 - 12:27 pm   I haven't really been following all of this debacle, but I can't say that I'm surprised about any of it. What I wonder is if this Enron thing isn't somehow linked to the energy crisis in California? Deregulation sure cost the California state government and taxpayers a pretty penny, and the Bush administration refused to help them out. Man, I can't even think about all this because it brings up all sorts of resentment dating back to November 2000. Those guys don't represent me in the slightest. Wake me in two years and ten months. |
Highlander | Thursday, January 17, 2002 - 12:55 pm   I am not sure if the Administration could have done anything if they were warned. If they had stepped in it would be a lot worse with accusations of taking care of their benefactors. The problem the administration has regarding Enron is the refusal of Cheney to divulge what went on in the six meetings he had with Lay. Also, we need to know who was told what and when. How much did the SEC know and what did they know about the fraud. How is there no regulation with the big accounting firms such as Arthur Anderson. Ari Fleischer is not helping matters at all by taking an adversarial role with the press and insisting that this is all politically based criticism. Certainly the Democrats are using the opportunity but it doesnt take away from the fact that the American people have a right to know everything including to what extent had Enron insinuated itself within the government and how much of our energy policy was dictated by Enron. We have a right to know just how much of our government is leased by big companies. |
Labmouse | Thursday, January 17, 2002 - 01:38 pm   Arthur Andersen is a Certified Public Accounting Firm (at one time the #1 accounting firm in the world and now presently #5 and falling). The key word here is CERTIFIED. Anybody can do bookkeeping and accounting. CPAs are supposed to be above "cooking the books". A one time Big 8 accounting firm was sued out of business for malpractice. They performed virtually the same illegal practices as Andersen. Job losses galore are in store for Enron and Andersen employees. |
Highlander | Thursday, January 17, 2002 - 01:43 pm   I think this could be the end for Anderson. I would look for them getting bought out. This would be the third time they have been hit for illegal practices. They got hit with a million dollar fine last year for illegal practices. |
Labmouse | Thursday, January 17, 2002 - 01:44 pm   Oregonfire, imagine the current administration without the existence of Sept. 11th. You'd be looking at a sure thing, one term only Presidency. |
Highlander | Thursday, January 17, 2002 - 01:46 pm   AFrom CNNfn.com ndersen, which admitted late Thursday to destroying Enron-related documents, was fined $7 million in June, the biggest civil penalty ever assessed against a Big Five accounting firm, after the SEC said its audits of Waste Management's financial statements were "false and misleading." The SEC said the company failed to stand up to the biggest U.S. trash hauler to prevent accounting irregularities. In November, Waste Management itself paid $457 million in fines to settle charges of violating securities laws in its 1998 merger with USA Waste Services and its 1999 financial statements. |
Labmouse | Thursday, January 17, 2002 - 01:50 pm   Highlander, in a strange way...Andersen will continue to exist no matter what happens. They created an offshoot consulting firm that eventually grew bigger than the accounting firm itself. Those guys severed all ties and split completely from Arthur Andersen. They exist today as Andersen Consulting. Andersen Consulting will be "untouchable" in this situation. |
Labmouse | Thursday, January 17, 2002 - 01:57 pm   Highlander, 7 million dollars is "chump change" for a company the size of Andersen. It would be sort of like someone fining me 10 cents for stealing 10 million dollars. I would pay it and laugh all the way to the bank. |
Highlander | Thursday, January 17, 2002 - 02:10 pm   True lab but they certainly are gaining a reputation as the Accounting firm to go to if you want to hide your dirty deeds. If I was the SEC I would start looking closely at all of Anderson's clients. And if I was Anderson's client I would sure be getting nervous about now, waiting for those federales to come knocking on my door. |
Highlander | Thursday, January 17, 2002 - 02:23 pm   If you want to know who your representatives biggest donors are check out http://www.opensecrets.org just punch in your zip code and it will list your representatives and you can click on their donors. |
Highlander | Thursday, January 17, 2002 - 04:15 pm   Now the fun begins. Lets see what Anderson fires back with. Enron Fires Arthur Andersen as Auditor Reuters HOUSTON (Jan. 17) - Bankrupt energy giant Enron Corp. said Thursday its board of directors voted to fire accountancy firm Andersen as the company's auditors, effective immediately. Andersen has come under fire for its handling of the Enron account, with pressure on Andersen growing after it said a partner ordered the destruction of documents related to its Enron audits. Enron said it would begin looking for a new auditor immediately. Enron filed for bankruptcy in early December after the revelation of a number of off-balance sheet transactions caused the company's stock price to collapse. ''We can't afford to wait any longer in light of recent events, including the reported destruction of documents by Andersen personnel and the disciplinary actions taken against several of Andersen's partners working in its Houston office,'' Enron Chairman and Chief Executive Officer Ken Lay said in a statement. Reuters 18:19 01-17-02 |
Crazydog | Thursday, January 17, 2002 - 04:51 pm   This is reminiscent of the Ford/Firestone debacle. Ford issued a statement saying they would no longer use Firestone tires. Then Firestone issued a statement saying they decided to sever their relationship with Ford. In effect, both parties tried to come away smelling like roses when in fact probably both were to blame. Andersen and Enron are both blaming the other in an attempt to minimize liability. Andersen claims Enron deceived them. Enron claims Andersen should have uncovered its own questionable dealings. I am a former auditor (I used to work for Price Waterhouse), and it seems to me that the public is clamoring for a scapegoat, and that has become Andersen. However, keep in mind that the financial statements are the responsibility of management. Management prepares the numbers based on its information. Believe me, if management really wanted to actively deceive its auditors, there are ways. However, in this situation, I think both are to blame. The reports of the Andersen partner reminding his employees about the shredding policy doesn't help Andersen's case. It used to be that auditors were truly independent. Companies were afraid of their independent auditors, and would worry about getting things past them. Nowadays, auditors are in companies' back pockets. The blame, as always, devolves upon the hunger for money. It used to be a large percentage of an accounting firm's revenues came from auditing, and the rest from tax and other services. Then the firms decided to get involved in the consulting business. During the economic boom of the mid to late 90s, consulting fees soared. I found that many times accounting firms were more than willing to take a bath on the audit fees just to land these lucrative consulting contracts. Of course, that would make our audits look extremely inefficient because the hours we worked and the fees we theoretically billed out in proportion to the actual dollars we received were ridiculous. It was very stressful on auditors when year after year they kept slashing the time budgeted for an audit because our fees kept decreasing. This also started the spiral towards the lack of independence. EVen when accounting firms only audited, often times I felt if there were judgment calls, they would almost always be resolved in favor of the client, because if we didn't tell them what they wanted to hear, they could always change auditors the next year. With the addition of consulting, the question of independence is even murkier. Of course you're going to do whatever your client says when millions of dollars in fees are at stake. I honestly feel that while perhaps nobody will ever fully resolve who is directly at fault, it is clear that neither party is blameless. Andersen is not the only villain here. But they will certainly suffer for it. They will lose clients as shareholders of their clients vote by proxy to dismiss Andersen as the auditor at the annual meetings. |
Highlander | Thursday, January 17, 2002 - 05:21 pm   I agree 100% Crazydog. With enron giving Anderson $52 million in business it is hard to take a tough line with a customer like that. I dont believe for one minute that Enron wasn't directing and pressuring Anderson every step of the way. We also know that an auditor can only look at the records they are given. I have been involved with a lot of company audits over the years and what we turn over to the auditors is what they see. If you dont turn stuff over they dont see it. I worked for a company that had accounts in the bahamas that nobody knew about and they would move money from the bahamas account to the local account to offset losses at quarter end. They never declared those assets but used them when they needed to to make the numbers look good in a bad quarter. |
Highlander | Friday, January 18, 2002 - 07:33 am   Commentary > Daniel Schorr from the January 18, 2002 edition The real Enron scandal By Daniel Schorr WASHINGTON - The deeper Enron scandal lies not in the nervous contacts with cabinet members when the giant corporation was sliding down the tube, but in its ability to manipulate a government awash in campaign contributions in the days when the company was flying high. That President Bush called CEO Kenneth Lay "Kenny Boy" was not a scandal. What was a scandal was that Enron profited from a climate of regulatory laxity that it helped to dictate. Mr. Lay and other Enron executives met several times last year with Vice President Dick Cheney, who was heading the president's energy task force. Mr. Cheney is still stonewalling congressional efforts to find out what happened in those meetings. But the task force recommendations for "reforming" the utility regulation law to provide "greater regulatory certainty" (read: deregulation) could have been written by Enron. Enron helped create what some called a regulatory "black hole." The Bush White House was deeply penetrated by a company that became the nation's seventh-biggest corporation not by making energy but by making deals. Economic counselor Lawrence Lindsey had been a paid adviser. Political strategist Karl Rove had been a big investor. Republican national chairman Mark Racicot had been a paid lobbyist. Lay himself had been on an early list of possible cabinet appointments. So much influence did Enron wield with the Bush administration that Lay could tell Curtis Herbert Jr., chairman of the Federal Energy Regulatory Commission, that he would be reappointed if he changed his views on electricity regulation. Mr. Herbert didn't, and he wasn't. Congress was not left untainted. More than two-thirds of the Senate and 40 percent of the House benefited - if that's the word - from Enron money, some of which is now being returned by embarrassed lawmakers of both parties. The $5.8 million in campaign donations from Enron sources since 1989 appear to have been a good investment. The tax rebate provision of the House-passed economic stimulus package alone would give Enron $254 million. The consequences of Enron's penetration of the United States government remain to be investigated by anyone left in government who doesn't have to recuse himself. Some day we may know whether Enron would have been able to bilk employees, investors, and a nation, were it not for that regulatory black hole that it bought for itself. Enron is not unique in the annals of lobbyist interests prevailing over the public interest. From contracts for unneeded weapons to a banana trade war, the decisions tend to come out in favor of the big contributors. What makes the Enron story different is the drama of the huge implosion in full view of thousands of victimized employees and investors. • Daniel Schorr is a senior news analyst at NPR. |
Labmouse | Friday, January 18, 2002 - 10:58 am   Mr. Schorr still has what it takes. Great commentary... |
Highlander | Friday, January 18, 2002 - 01:51 pm   WASHINGTON (CNN) -- Vice President Dick Cheney asked Indian opposition leader Sonia Gandhi last June about a multimillion-dollar debt owed to Enron from a major energy project in India, administration officials confirmed Friday. The officials told CNN the subject came up for only a moment at a meeting at the White House, and that no one at Enron asked Cheney to raise the issue. Cheney met with Gandhi to discuss general diplomatic issues affecting the U.S. and India. These two officials also noted that the taxpayer-financed Overseas Private Investment Corporation had a stake in the issue; OPIC could face payouts of perhaps $300 million, because it agreed to underwrite political risk insurance as part of the Enron deal. A Cheney aide said the vice president has had three meetings with Indian officials since the Bush administration took office. The $64 million Enron debt has come up just once, in the June 27th meeting with the opposition leader. The aide told CNN that Enron CEO Kenneth Lay "never asked him to do it, no one at Enron asked him to talk about it. It was in the briefing papers Cheney received in advance of the meeting, and he asked about the status of the Enron project." The officials noted the meeting was in June; it was several months later that Enron's financial problems began to surface. Administration officials say there was nothing improper about raising the Enron debt issue. But reports of Cheney's actions come at a time some Democrats in Congress are suggesting Enron benefited from its deep ties with senior Bush administration officials. |
Twiggyish | Tuesday, January 22, 2002 - 07:05 am   How about this latest news about shredding documents? It was implied that the documents shredded were duplicates. Ok, tell me another fairy tale. Do they think we the American public are stupid? Here's yet another article: Abc news: A day after a former Enron executive told ABCNEWS in an exclusive interview that document-shredding continued at the firm as recently as last week, an attorney will take shredded documents to federal court in Houston to argue that it prevent further "tampering" with documents in the case. The attorney, William Lerach, who has filed a class-action suit against the failed energy firm on behalf of employees and stockholders, said he thought the court should begin to take physical possession of evidence from the firm and its auditor Andersen, and appoint independent experts to try to restore deleted e-mail. "It may be necessary that we put a U.S. Marshal or someone on the premises there at Enron to make sure these people behave themselves," argued Lerach on ABCNEWS' Good Morning America . Shredders Were ‘Working Overtime’ Document-shredding continued at Enron's headquarters up until at least last week, former Enron executive Maureen Castaneda told ABCNEWS, despite federal subpoenas and court orders since last October forbidding the destruction of documents. Castaneda, the former director of Enron's foreign investments section, said the shredding was done in an accounting office on the 19th floor of the company's Houston headquarters. "I left the second week of January and the shredding was going on until the day I left, and I have no idea if it continues," said Castaneda, who worked across the hall from the accounting office. "After Thanksgiving, there was great interest in the accounting documents stored," she said. "They pulled out all the boxes and people had to go through every box." Castaneda added in a GMA interview this morning, "I think the accountants were probably working a lot of overtime. You could tell by the pizza boxes and trash cans." The former executive says she had no idea what was going on — even used the shreddings to pack up her belongings — until she received an e-mail from the corporate attorney reiterating company policy forbidding document shredding. "That's when the lightbulb went on," recalled Castaneda, "And I said, 'Well, wait a minute, if they're not supposed to destroy them, why are they destroyed?' " ‘It Will Not Be Tolerated’ Enron attorney Bob Bennett told ABCNEWS Monday that all employees had been forbidden to shred any documents as of Oct. 25. "At a very early time, the legal team made all employees aware of the pending litigation and that all documents should be retained," Bennett told ABCNEWS. "If anyone has disobeyed that policy or if anyone is discovered to have shredded documents it will not be tolerated and severe action will be taken." He also said the company was investigating the reports. Castaneda said she discovered the shredded documents when she was cleaning out her office and looking for packing material. She showed ABCNEWS boxes full of shredded documents dated from November and December, which she found in the hallway. "I got these when I was leaving work, to basically use for packing material," she said. "I only took one box." The word "confidential" can be seen on the shredded papers, which were densely packed into the box she showed ABCNEWS. "A lot are accounting documents," explained Castaneda. "You can tell because of the colors yellow and pink." Also, she found shreds with references to some of Enron's secret, off-the-books partnerships, such as Jedi, which is believed by investigators to have helped bring Enron down. Lawyers in the case regard this as likely evidence of a criminal act: destroying documents in the middle of a federal investigation is potential obstruction of justice. ABCNEWS' Brian Ross contributed to this report. |
Misslibra | Tuesday, January 22, 2002 - 05:59 pm   Twiggy, I heard about Enron still shredding documents. When I heard this I was thinking they had better get someone in there to keep a eye on what the heck those people are doing. I was relieved to hear that the FBI is there now. I'm glad that Woman who took out a box of shredded documents reported this. Even though I don't buy her story that she was going to use the shredded documents as packing material. |
Babyruth | Friday, January 25, 2002 - 10:40 am   Here's an excellent song parody, The Wreck of the Enron Fitzgerald: Click on the music note symbol to hear the music. http://bootnewt.tripod.com/enronfitz.htm |
Nashbag | Friday, January 25, 2002 - 11:24 am   JUST IN... Former Enron VEEP commits suicide this monring. what an awful mess... |
Babyruth | Friday, January 25, 2002 - 02:36 pm   Well, they are saying it looks that way so far, but...... |
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