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News
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Ex-CFO Fastow to take Fifth
graphic February 4, 2002: 6:36 p.m. ET

Andersen CEO to testify on accounting reform; Skilling to appear Thursday.
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  • Andersen CEO: Enron cost firm business -- Jan. 28, 2002
  • Ex-Enron CEO: Not me -- Dec. 22, 2001
  • Senate to subpoena Lay -- Feb. 4, 2002
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    NEW YORK (CNN/Money) - The embattled CEO of Arthur Andersen LLP, Joseph Berardino, will testify this week before Congress on accounting reform, while two congressional committees are expected to subpoena Enron ex-CEO Kenneth Lay.

    Berardino will appear Tuesday before the House Finance subcommittee on capital markets beginning at 10 a.m. ET. Berardino, in his second appearance before Congress, will speak on the changes at Andersen as well as reform to the accounting industry to restore investor confidence, a spokesman said.

    Andersen, the accounting firm, has come under fire since the energy company filed for bankruptcy protection. Some have alleged that Andersen, acting as Enron's auditor, signed off on questionable off-balance-sheet partnerships that hid huge amounts of Enron debt.

    "We are cooperating with all of the committees in Congress," an Andersen spokesman said.

    However, Enron former Chairman and CEO Kenneth Lay is not. Lay on Sunday backed out of a much anticipated Senate hearing for Monday, much to the ire of Congressional investigators. Two Congressional committees are now set to subpoena Lay to force him to appear. If Lay is subpoenaed, he will appear Feb. 12 before the Senate Commerce Committee.

    The Powers report

    Day two of the Enron hearings will feature William Powers, a member of the company's board, who is author of a 203-page Enron internal review. "We found a systematic and pervasive attempt by Enron's management to misrepresent the company's financial condition," Powers told Congressional investigators Monday.

    There was a fundamental default of leadership and management that began with Lay and reached the board and senior managers, Powers said.

    The "Powers report," which claims Enron executives reaped millions of dollars from off-the-books partnerships while the energy company violated basic rules of accounting and ethics, will continue to dominate Powers testimony Tuesday.

    SEC Chairman Harvey Pitt told Congress Monday that government regulators are conducting an investigation into the Enron collapse. "When Enron began to implode, SEC issued a no-holds-barred investigation," Pitt said. "But until the investigation is completed we cannot fairly assign blame."

    On Wednesday, the full House Energy and Commerce Committee will focus on lessons learned from Enron and will question various accounting academics.

    Fastow and Kopper to take Fifth

    But some of the more colorful tidbits in the Enron saga could come later this week, when former CEO Jeff Skilling is slated to appear before the House Oversight and Investigations Subcommittee, part of the Energy and Commerce Committee. Skilling, who resigned last August from Enron, is credited as one of the designers of the off-the-book transactions.'

    Skilling will appear Thursday and is expected to testify before the House oversight and investigations subcommittee, Congressional sources with knowledge of the situation told CNN/Money. Andrew Fastow, former Enron Chief Financial Officer, will also appear voluntarily, but his lawyers have told congressional investigators that he will invoke the Fifth Amendment, a source said.

    Fastow made $18.5 million in profit by selling $32 million of Enron shares since 1998. Skilling sold about $190.4 million in stock and netted a profit of $112 million, according to data from Thomson Financial.

    Press reports have also quoted Skilling as saying the partnerships were Fastow's idea. Fastow was ousted from his position as CFO of Enron in October.

    Another Enron executive, Michael Kopper, has also been subpoenaed and will also invoke his Fifth Amendment right against self-incrimination, sources said. Kopper, a former Enron officer, is a managing partner that worked for Fastow.

    Three other executives are slated to appear Thursday. Robert Jaedicke, a member of Enron's board and chairman of the firm's audit committee will appear and testify. Richard Causey, Enron vice president and chief accounting and information officer, will also appear and answer panel questions. Richard Buy, Enron chief risk officer, also will testify Thursday. graphic


    -- from staff and wire reports

      RELATED STORIES

    Andersen CEO: Enron cost firm business -- Jan. 28, 2002

    Ex-Enron CEO: Not me -- Dec. 22, 2001

    Senate to subpoena Lay -- Feb. 4, 2002





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    Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

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