[A-List] Financial regulatory crisis

["Keaney Michael" <Michael.Keaney@xxxxxx>]

More trouble for Arthur Andersen...


Andersen faces Durex firm inquiry

Andrew Clark
Wednesday February 20, 2002
The Guardian

Accountancy firm Andersen responded defiantly yesterday to news that it
will face a disciplinary investigation by its professional body into its
role as auditor to the scandal-hit Durex condoms maker, SSL
International.

The inquiry by the accountants' joint disciplinary scheme will look at
allegations of incompetence and misconduct by "members and member firms"
who were involved with SSL, which revealed last year that it had
recorded £22m of bogus sales.

In a sign that Andersen is tiring of constant bad publicity following
its association with the collapsed American energy group Enron, the firm
issued a statement casting doubt on the extent of the irregularities
uncovered by new management at SSL.

The accountancy firm said it was "not allowed to communicate with the
directors, employees or customers involved", and that this led it to
qualify its audit of SSL for the year to March 2001.

It added that restatements of SSL's accounts were "not necessarily
correct" and that there was "no prima facie evidence" that it failed to
detect a management fraud.

A sprawling Cheshire-based healthcare company, SSL makes products
ranging from catheters to corn plasters and colostomy bags.

New directors of the SSL say that in 1999 and 2000, dozens of
consignments were driven around the outskirts of Man chester to company
warehouses, in which goods were hidden away and booked as sales.

The serious fraud office is examining the allegations, which led to the
resignation of the company's executive team last year.

Yesterday's announcement from the accountants' joint disciplinary scheme
followed a report by the institute of chartered accountants which
concluded that there was a case to answer.

Christopher Dickson, executive counsel of the joint disciplinary scheme,
said: "The institute has decided that this is a matter of public
interest, and that it should be taken on by us."

If the investigation concludes that misconduct has taken place, it can
lead to accountants being reprimanded, disqualified from practising or
facing unlimited fines.

Among those to face questions will be SSL's former finance director Paul
Sanders, former chairman Stuart Wallis and non-executive director Rodney
Sellers, who are all qualified accountants.

In a surprise move, the disciplinary body said the scope of its
investigation would extend to London International Group - the condoms
company which merged with Seton Scholl in 1999 to form SSL.

That could mean questions for David Davies, the former finance chief of
London International who now serves as finance director at engineering
company Morgan Crucible.

Full article at:
http://www.guardian.co.uk/business/story/0,3604,653042,00.html

Michael Keaney
Mercuria Business School
Martinlaaksontie 36
01620 Vantaa
Finland

michael.keaney@xxxxxx