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Accounting group sought Enron donation
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February 13, 2002: 6:59 p.m. ET
Ex-Fed Chairman Volcker asked Enron for $500,000 donation to IASB.
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NEW YORK (CNN/Money) - A key lawmaker confirmed Wednesday that an international accounting group asked the now-collapsed Enron Corp. for a $500,000 donation last year.
Paul Volcker, former Federal Reserve Chairman and current Chairman of the International Accounting Standards Board's trustees, asked Enron Corp. to donate $100,000 a year for five years, Sen. Levin (D-Mich.) said.
Volcker was recently named by Enron's former accountant Arthur Andersen to head an independent board that will help the company implement changes in audit practices.
Enron, a large contributor to the Republican party and President George Bush, had considered making the donation in hopes of increasing its influence over the group, Levin said.
It is unknown whether Enron ever made the donation or gave any amount to the IASB. The London-based accounting group could not be reached for comment Wednesday.
Levin is chairman of the Senate's permanent subcommittee on investigations, which released the Feb. 23, 2001 e-mail from now-fired Andersen auditor David Duncan to several Andersen colleagues.
The IASB is the international version of the Financial Accounting Standards Board (FASB). The IASB is developing a single set of accounting standards for companies internationally while the FASB sets accounting rules for United States companies.
However, trustees of the IASB do not set international reporting standards. Rather, the trustees are charged with governance, fund raising and public awareness of the IASB.
Houston-based Enron filed the largest bankruptcy in United States history late last year after its questionable accounting practices spooked investors.
Levin, who disclosed the e-mail Wednesday as he introduced stock option legislation, said Volcker's actions weren't improper.
"That is exactly how these accounting standards boards get funded," Levin said. "And the response by Enron is not really surprising -- it's something we've all known [about] but we've never had written confirmation of it."
Such contributions by companies such as Enron to the accounting standards boards affect the boards' independence. "That's bad news for reliable accounting," Levin said.
Andersen has come under considerable scrutiny for its role in the Enron scandal and allegedly approving the company's use of obscure partnerships to hide nearly $1 billion in debt.
Harvey Pitt, Chairman of the U.S. Securities & Exchange Commission, recently introduced a plan to reform the way accounting firms are regulated, including an overhaul of the peer review system.
The Duncan e-mail refers to a call from Enron's then-chief accounting officer Richard Causey to Duncan asking if such a donation will give Enron's access to IASB rulemaking.
It said: "Rick is interested in knowing whether these type of commitments will add any formal or informal access to this process (i.e., would these type [of] commitments present opportunities to meet with the trustees of these groups or other benefits)." 
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