New accounting rules floated
Enron-inspired rules proposed by industry group, congressional representative.
February 28, 2002: 6:28 p.m. ET
|
NEW YORK (CNN/Money) - The ranking Democrat on the House Financial Services Committee introduced a bill on Thursday that would toughen the rules governing corporations, auditors and securities analysts, and provide more money for the Securities and Exchange Commission. Also Thursday, a leading industry group of accountants, the American Institute of Certified Public Accountants (AICPA), issued expanded fraud guidance for CPAs aimed at helping auditors detect material misstatements due to fraud.
And President Bush, speaking in Washington, said that companies that contribute stock to employee 401(k) retirement plans should allow workers to diversify into other investments after three years, should provide a 30-day notice before any blackout periods preventing the sale of company stock, and should block company officers from selling stock whenever rank-and-file employees are blocked from doing so.
These moves are specifically aimed at the kinds of problems that have surfaced in the Enron scandal. The bill, introduced Thursday by Representative John LaFalce (D-N.Y.) with the backing of the House Democratic leadership, is called the Comprehensive Investor Protection Act, or CIPA.
The LaFalce bill would toughen the rules for corporate governance by, for example, vesting the audit committee with the power to hire and fire auditors. It also would prohibit directors from providing consulting services to the company and take several other measures aimed at improving the performance and independence of auditors and boards. He also wants auditors to file key records for seven years to prevent the destruction of records, which has been a problem in the Enron bankruptcy case. Details
In other Enron news:
Congressional investigators Thursday sent a letter to Enron's former CEO Jeff Skilling asking him to clarify remarks he made recently in sworn testimony before Congress.
Skilling, who appeared before two separate panels, repeatedly denied knowing that any of Enron's off-the-book transactions were used to hide debt. Now Rep. Billy Tauzin (R-La.), chairman of house energy and commerce committee, and Rep. John Dingell (D-Mich.) ranking member of the committee, want Skilling to further explain his knowledge of the various partnerships.
"Documents recently obtained by he Committee investigators appear to raise serious questions about the accuracy of your testimony with respect to your involvement in the Raptor transactions," Tauzin and Dingell said in the Feb. 28 letter to Skilling.
A group of bankers at Credit Suisse First Boston played a critical role in creating off-the-book partnerships that were allegedly used to hide $1 billion in debt and inflate profits at Enron Corp.
Enron depended heavily on CSFB to engineer its partnership, the Financial Times reported. Enron paid more than $250 million in fees to Wall Street banks in 2000. DLJ and CSFB were among six banks that received more than $20 million in Enron fee income, the FT said.
Enron Corp.'s creditor committee won a key motion Thursday that will force the testimony of several Arthur Andersen witnesses and compel the accounting firm to provide documents regarding its role in the energy trader's collapse. On Thursday, Judge Arthur Gonzalez of the U.S. bankruptcy court for the Southern District of New York ordered Andersen to produce documents and testimony from eight current or former employees, including fired auditor David Duncan and Michael Odom, the risk management partner responsible for the firm's Houston office.
Law firm Davis Polk & Wardwell is also named in the order and will have to provide documents and witnesses. However, the names of the law firm's personnel were not revealed in the court documents. Details
Auditor Arthur Andersen is proposing a $750 million total payment to settle civil claims against it due to the collapse of Enron Corp., a plaintiff's attorney told CNNfn Thursday.
Andersen is offering to pay $250 million immediately and the remaining $500 million to be paid in $100-million increments over the next five years, the attorney said.
The money would be split among three major parties suing Andersen: Enron shareholders, Enron creditors, and former and current Enron employees enrolled in the company's 401(k) plan, the unidentified attorney said.
The Washington Post reported Thursday that the firm believes it must reach a quick resolution, before companies send out annual ballots asking shareholders to ratify their choice of independent auditors. Many of those proxy statements go out in mid-March.
Some of the bankrupt company's top energy traders are expected to quit the troubled company soon, a move that could be a blow to UBS AG, the Swiss financial services firm that bought the unit earlier this month.
UBS Warburg, the U.S. unit of UBS AG, agreed to buy the Enron energy trading unit last month for only the promise of future earnings from the unit. If the unit is not as profitable, it will mean less money will be available for Enron and its creditors.
UBS said last month that it had offered jobs to about 650 of the 800 employees of Enron's energy trading unit, once the key operation at the now bankrupt company. But the Wall Street Journal reported Thursday that many of those offered jobs have decided to leave and will do so soon. Some are waiting for the imminent end of a 90-day period during which they received lucrative and controversial retention bonuses.
Among those who have decided to leave, according to the Journal report, is John Arnold, 27, who helped build Enron Online into a power in the energy trading world and some days handled $1 billion in trades. The paper quotes unidentified traders as saying Arnold made $700 million in profit for Enron last year. The paper said that Arnold declined to comment on his plans, but that the company confirmed his departure.
U.S. congressional investigators hope to strike a deal with Enron Corp. as early as Thursday to disclose the bankrupt energy trader's tax records, aides told Reuters News Service. The deal would clear the way for the Senate Finance Committee to step up its investigation of whether Enron improperly avoided paying federal income taxes, or exploited tax loopholes that may need to be closed. 
|
| SPECIAL: |
|
|
|
|
|
|
OTHER STORIES
