NEW YORK (MONEY Magazine) - The collapse of Enron continues to have a profound impact on the markets and corporate America. To wade through the tangled issues of culpability, I've turned to one of the pre-eminent financial minds of our time -- Walter Wriston, the former chairman and chief executive of Citicorp (now Citigroup).

During his 17 years at the helm, Wriston was widely regarded as one of the world's most important bankers -- if not the most important. But Wriston is more than an expert on banking, he is an authority on the financial markets, corporate America and the history of Wall Street. In short, he's the perfect person to ask for perspective on the Enron crisis. (I offer my own less diplomatic perspective in a postscript to the interview.)

Dobbs: The Enron collapse has raised many questions about corporate financial practices, most notably corporate accounting. Why has this issue become so complicated?

Wriston: The accounting profession has become almost like the Internal Revenue Service. In other words, there are over 800 pages now from FASB [Financial Accounting Standards Board] on how to account for a derivative. And the result is that the regulations are so prolix that they are subject to a lot of different interpretations, as opposed to the International Accounting Standards Board, where they give broad general principles. We have gone the legalistic route [in the U.S.] and now we have thousands and thousands of pages that are very, very difficult to interpret.

Dobbs: What do you think of indicting Andersen as a firm?

Wriston: I remember years ago in a diplomatic incident, some famous statesman said you cannot draw up an indictment against a whole nation. And it seems to me that to indict a whole company for the actions of a few is stretching a little bit beyond the bounds of what you might expect, particularly from this administration.

In terms of corporate accounting practices, one thing that has always interested me is that the certificate the accounting firm gives the company says very clearly that the integrity of the numbers is the responsibility of the management and not the responsibility of the auditors. But the accounting profession has never said that out loud in the congressional hearings. The auditors have to rely on the internal controls at the company. You take a company that has operations in five, 10, 100 different foreign countries and they pay [auditors] $30 or $40 million a year. There isn't any way that the audit will catch a fraud unless the internal controls of the company itself catch it first.

Dobbs: Do you think that the collapse of Enron will result in significant changes to the accounting industry?

Wriston: Well, I think that the competition -- if you want to put it that way -- between FASB, which has now been effectively taken over by the Securities and Exchange Commission, and the International Accounting Standards Board in London will intensify. I would suspect that the international standards board is going to achieve more importance in America than it has in the past.

Dobbs: Who else should share in the blame here? Obviously Enron management, Andersen, the regulators...

Wriston: I don't think anyone walks away from this feeling very good about himself: the regulators, the auditors, the bankers, the directors, to say nothing of the management. You start with the SEC. No one brings it up, but the whole thing started by the SEC granting a waiver. When Arthur Levitt was the chairman of the SEC, the SEC issued waivers of the Public Utility Holding Company Act and the Investment Company Act, which made these off-balance-sheet deals and partnerships legal for Enron.

Dobbs: What about Wall Street?

Wriston: Wall Street was perhaps too easy in granting the loans. And the auditors were obviously looking out the window when they should have been more alert. The ratings agencies certainly missed this one by a wide mile.

Dobbs: What about the banks?

Wriston: I think you have the potential for a conflict of interest when you have [a bank] both underwriting and making loans. It happened with all the merchant banks -- Goldman, Salomon and all the rest of them. It's the same as analysts who write golden words about the future of a company -- analysts who may or may not take into account the fact that their bosses are collecting huge fees for the underwriting.

Dobbs: We've also had criticism of Enron's board. Should corporate America re-examine its board system?

Wriston: The interesting thing is that we hear all this nonsense about how to structure boards and corporate governance and all that, but Enron had a board that included a dean of a school of accounting and a lot of other very good people. The answer is that structure means almost nothing. What means something is a board of bright people who have opened a channel of communication directly with a company and with auditors. Structure is less important than the board's ability to communicate clearly and almost continuously in complicated accounting matters.

Dobbs: What is your opinion of the way that lawmakers and regulators are handling the Enron aftermath?

Wriston: The good news is that the government didn't step in to save the company, like the Federal Reserve-arranged bailout of Long Term Capital or the Treasury rescue of Mexico. That's excellent because it creates accountability.

Dobbs: And transparency for investors?

Wriston: The difference between the International Accounting Standards Board in London and the FASB hasn't gotten much press. [In the U.S.] we've gone so far into the legalistic side, because of the plaintiffs' bar, that you have to cover every base. It's gotten to the point where information is concealed by the data. You'll find a 10-K [filing] with 150 pages of fine print -- legally, the company has told everybody, but actually they have not. At some point, I think we'll have to simplify it so that ordinary people can understand it without getting two lawyers to help.

And now, a few of my thoughts. On Moneyline, I've criticized the Justice Department's move to indict Enron's auditing firm, Andersen, on a single count of obstruction of justice. In the case of an accounting firm, a criminal indictment is so damaging that it's effectively an arrest, conviction and sentencing, all in one act. Any other type of company would have legal due process. This misguided decision means tens of thousands of innocent people across the world will lose their jobs, while not one executive of Andersen or Enron has been indicted.

Andersen not only admitted that a number of its employees shredded Enron-related documents, but the firm also reported it to the Justice Department. But no one has yet shown that those destroyed documents were material to the investigation into Enron's collapse. Andersen is therefore accused of disposing of documents that may or may not have anything to do with the Enron scandal. For this, should 85,000 innocent people lose their jobs? When Andersen's auditors signed Enron's financial statements, Andersen clearly stated that the information included was the responsibility of Enron management. That responsibility is spelled out in every annual report of every corporation in America audited by an accounting firm.

Andersen is now on the brink of collapse. Joseph Berardino, before he resigned as chief executive officer of Andersen, brought in Paul Volcker, the respected former Federal Reserve chairman, to oversee the firm's reform. But under the weight of the Justice Department's crippling indictment and the resulting loss of many of Andersen's most important clients, massive layoffs could not be avoided.

Even more galling, while Andersen's survival seems, at the time of this writing, unlikely, no authority -- including the Justice Department -- has charged Enron or any of its executives with a crime. Isn't this supposed to be about Enron? For justice to be served, the government must identify and hold accountable the Enron executives responsible for this situation. Then investigators need to look at who else should have raised a red flag. And those individuals, as well, should be scrutinized and appropriately punished.