IP: What a surprise: AA destroyed Enron docs

[David Farber <dave () farber net>]

> Reply-To: <kgb () kgb com>
> From: "Kevin G. Barkes" <kgb () kgb com>
> To: <farber () cis upenn edu>
>
>
> Arthur Andersen Says It Destroyed
> Documents Related to Enron Account
>
> A WALL STREET JOURNAL ONLINE News Roundup
>
> WASHINGTON -- Arthur Andersen LLP, already under
> fire for its audits of Enron Corp., said it
> destroyed documents sought by federal law
> enforcement officials investigating the Enron
> debacle.
>
> In a statement issued Thursday, Andersen said it
> notified the U.S. Justice Department and the
> Securities and Exchange Commission that
> individuals at the firm "disposed of a significant
> but undetermined amount" of documents relating to
> its work for Enron. The Houston energy company
> filed for bankruptcy protection in December after
> announcing it had overstated four-and-a-half-years
> worth of earnings.
>
> The document destruction included paper documents
> and e-mail correspondence.
>
> Andersen said it has instructed employees to
> retain all existing documents "until further
> notice."
>
> In addition, the Chicago-based Big Five accounting
> firm said it has asked former Sen. John Danforth
> (R., Mo.) to conduct "an immediate and
> comprehensive review" of the firm's policies on
> document handling and recommend improvements.
>
> Andersen said destruction of Enron documents
> occurred "in recent months" by individual
> employees involved in auditing the energy company.
>
> But Andersen said millions of documents related to
> Enron still exist, and it has managed to retrieve
> some of the deleted electronic files. Andersen
> said it is continuing retrieval efforts through
> electronic backup files, "and is continuing in its
> efforts to fully learn and understand all the
> facts related to this issue."
>
> Rep. Billy Tauzin, a Louisiana Republican whose
> House Energy and Commerce Committee is among the
> agencies and panels investigating, called the
> destruction of documents "a deeply troubling
> development."
>
> "Anyone who destroyed records simply out of
> stupidity should be fired. Anyone who destroyed
> records to try and subvert our investigation
> should be prosecuted," Mr. Tauzin said.
>
> Enron was one of Andersen's largest clients,
> generating $25 million a year in audit fees and
> $27 million of fees for consulting. Enron, a
> high-flying energy company that last year ranked
> No. 7 on the Fortune 500 list, announced big
> losses last October in off-balance-sheet
> partnerships run by former Chief Financial Officer
> Andrew Fastow. In November, Enron acknowledged it
> had overstated earnings by $569 million over a
> four-and-a-half-year period and said investors
> couldn't rely on its past financial statements.
>
> The SEC launched a formal investigation into
> Enron's accounting on Oct. 31.
>
> The surprise announcement by Andersen came on a
> day punctuated by revelations from members of the
> Bush administration concerning Enron.
>
> President Bush, fearing political fallout from the
> loss of millions of dollars in savings by Enron
> employees, ordered his economic team to review
> pension rules that could put other workers and
> pensioners at risk. (See full article.) And the
> White House said that Enron Chairman Kenneth L.
> Lay reached out to two cabinet officers when the
> energy company was collapsing.
>
> Also, Attorney General John Ashcroft, who received
> campaign contributions from Enron executives
> during his failed 2000 senatorial bid, said he
> will recuse himself from the criminal
> investigation of Enron being conducted by the
> Justice Department.
>
>
>
> Regards,
>
> KGB
>
> -----
> Kevin G. Barkes
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