The head of accounting giant Arthur Andersen, under fire as auditor of bankrupted Enron Corp, sought on Sunday to cast the company's spectacular collapse as the consequence of a failed business model rather than a result of illegal practices.
"To my knowledge, there was nothing that we've found that was illegal," Andersen Chief Executive Joseph Berardino said on NBC's "Meet the Press" current affairs program.
PHOTO: AP
"This is a company whose business model failed. The accounting reflects the results of business activities. And the way these events were being accounted for were clear to management and to the board.
"But at its base, this is an economic failure," he said.
Berardino also denied that problems at Enron, coming on the heels of accounting controversies involving other large clients, put Andersen's survival at risk. "I don't think we're finished at all. We're meeting with our clients," he said.
Enron, the Houston-based energy trading company with ties to US President George W. Bush and other Republicans, was once a darling of Wall Street with a soaring stock price and a future made bright by the promise of energy deregulation.
But the company faltered last year and collapsed in the biggest bankruptcy filing in US history, wiping out the life savings of many workers while senior executives reaped huge profits by selling shares.
In the unfolding scandal, Enron's aggressive bookkeeping practices have come under scrutiny by government investigators, while Securities and Exchange Commission Chairman Harvey Pitt has proposed tougher accounting oversight.
On Sunday, Pitt said it was too early to say whether investors were treated fairly in the marketplace as Enron imploded.
"From everything I've seen and heard, this is a situation that is incredibly troublesome and requires very vigorous and firm relief, both enforcing existing laws against those who have done the wrong thing and making certain that our rules protect investors," he told ABC's "This Week."
Enron and Andersen were scheduled to be the focus of congressional committee hearings this week by the House Energy and Commerce subcommittee on oversight and investigations and the Senate Governmental Affairs committee.
US Secretary of State Colin Powell found himself fielding questions about a Bush administration decision to intervene with Indian officials last year in a bid to salvage Enron's troubled US$2.9 billion Dabhol power project, which had been financed in part by the US government.
The White House has denied that involvement by senior officials including Vice President Dick Cheney was influenced by Enron's political contributions.
Powell told Fox News Sunday there was "nothing inappropriate" about US-Indian contacts. "It was something that was important to an American company, and why shouldn't the American government try to help one of its companies that is having difficulty," said Powell, who could not recall any discussions with Indian officials on the subject.
Andersen has come under fire over Enron since evidence surfaced that the firm knew of crucial issues surrounding the energy giant's debt-laden partnerships as early as February.
As auditor, Andersen signed off on accounting practices that hid billions of dollars in off-balance-sheet debt and led to a US$600 million reduction of four years' worth of earnings.
"Those books were not cooked in February or in August. There were questions about the viability of some of the assets. And those were reflected in the accounts when the facts became known," Berardino said.
Enron fired Andersen as its accountant last week.
Meanwhile, Andersen fired its lead partner on Enron, David Duncan, after the Big Five accounting firm confirmed he ordered the destruction of Enron-related documents despite an SEC request for the files. "Frankly, we're very concerned about those activities," Berardino said. "At the least, in our opinion, [Duncan] displayed extremely poor judgment in his destruction of documents."
He also defended Andersen against an assertion that the firm may have overlooked issues involving potential conflicts of interest and the off-balance-sheet financings because Enron represented US$100 million a year in consulting fees.
"That's a lot of money, we understand that. But we're also a US$10 billion organization. This client was a fraction of 1 percent of our fees," Berardino said.
"Everybody wants to talk about the off-balance-sheet liabilities. But those liabilities also were countered by off-balance-sheet assets. The key here is that those assets lost value very quickly," he said. "The work we had done for Enron, under any scenario, were appropriate and were disclosed to the board and to the shareholders."
AIR SUPPORT: The Ministry of National Defense thanked the US for the delivery, adding that it was an indicator of the White House’s commitment to the Taiwan Relations Act Deputy Minister of National Defense Po Horng-huei (柏鴻輝) and Representative to the US Alexander Yui on Friday attended a delivery ceremony for the first of Taiwan’s long-awaited 66 F-16C/D Block 70 jets at a Lockheed Martin Corp factory in Greenville, South Carolina. “We are so proud to be the global home of the F-16 and to support Taiwan’s air defense capabilities,” US Representative William Timmons wrote on X, alongside a photograph of Taiwanese and US officials at the event. The F-16C/D Block 70 jets Taiwan ordered have the same capabilities as aircraft that had been upgraded to F-16Vs. The batch of Lockheed Martin
GRIDLOCK: The National Fire Agency’s Special Search and Rescue team is on standby to travel to the countries to help out with the rescue effort A powerful earthquake rocked Myanmar and neighboring Thailand yesterday, killing at least three people in Bangkok and burying dozens when a high-rise building under construction collapsed. Footage shared on social media from Myanmar’s second-largest city showed widespread destruction, raising fears that many were trapped under the rubble or killed. The magnitude 7.7 earthquake, with an epicenter near Mandalay in Myanmar, struck at midday and was followed by a strong magnitude 6.4 aftershock. The extent of death, injury and destruction — especially in Myanmar, which is embroiled in a civil war and where information is tightly controlled at the best of times —
Taiwan was ranked the fourth-safest country in the world with a score of 82.9, trailing only Andorra, the United Arab Emirates and Qatar in Numbeo’s Safety Index by Country report. Taiwan’s score improved by 0.1 points compared with last year’s mid-year report, which had Taiwan fourth with a score of 82.8. However, both scores were lower than in last year’s first review, when Taiwan scored 83.3, and are a long way from when Taiwan was named the second-safest country in the world in 2021, scoring 84.8. Taiwan ranked higher than Singapore in ninth with a score of 77.4 and Japan in 10th with
SECURITY RISK: If there is a conflict between China and Taiwan, ‘there would likely be significant consequences to global economic and security interests,’ it said China remains the top military and cyber threat to the US and continues to make progress on capabilities to seize Taiwan, a report by US intelligence agencies said on Tuesday. The report provides an overview of the “collective insights” of top US intelligence agencies about the security threats to the US posed by foreign nations and criminal organizations. In its Annual Threat Assessment, the agencies divided threats facing the US into two broad categories, “nonstate transnational criminals and terrorists” and “major state actors,” with China, Russia, Iran and North Korea named. Of those countries, “China presents the most comprehensive and robust military threat
RSS