Arthur Anderson: guilty as charged

[Louis Proyect <vze47t8m@xxxxxxxxxxx>]

I get a real satisfaction out of this. Back in 1988 I was at 
Goldman-Sachs when a large contingent of people from the Arthur 
Anderson consulting division came in to replace people like me, who 
had become dispensable. These were mostly snot-nosed kids in "power 
ties" and red suspenders who had only graduated from some ivy league 
college a few years earlier, while I had been designing systems for 
20 years. Arthur Anderson was getting between $800 and $1000 a day 
for their services. It always seemed questionable to me that the 
number two man in the systems area had come to Goldman-Sachs from 
Arthur Anderson. I imagine that opening the doors to his former firm 
in this fashion would have profited him in some way.

At the time Arthur Anderson represented the "cutting edge" of the new 
economy. Whether in systems or in accounting, they supposedly had 
some sort of divine gift for turning American companies into lean and 
mean profit-generating entities. It turned out that they were crooks 
just like the rest of the capitalist class.

====

NY Times, June 16, 2002

Andersen Guilty in Effort to Block Inquiry on Enron
By KURT EICHENWALD


HOUSTON, June 15 ? A federal jury convicted Arthur Andersen today of 
obstruction of justice for impeding an investigation by securities 
regulators into the financial debacle at Enron. Soon afterward, 
Andersen informed the government that it would cease auditing public 
companies as soon as the end of August, effectively ending the life 
of the 89-year-old firm.

The jury verdict, reached in the 10th day of deliberations, reflected 
a narrow reading of the events last fall that led to Andersen's 
indictment. In interviews, jurors said that they reached their 
decision because an Andersen lawyer had ordered critical deletions to 
an internal memorandum, rather than because of the firm's wholesale 
destruction of Enron-related documents. 

At bottom, then, the guilty verdict against Andersen ? on a charge 
brought because of the shredding of thousands of records and deletion 
of tens of thousands of e-mail messages ? was ultimately reached 
because of the removal of a few words from a single memorandum.

The conviction is the first ever against a major accounting firm and 
was based on the first criminal indictment stemming from the 
government's investigation into the events that led to Enron's 
collapse in December. Sentencing has been scheduled for Oct. 11, and 
Andersen faces the possibility of fines up to $500,000. 

full: http://www.nytimes.com/

====

Meanwhile, the head of my old company is expressing concerns about 
the rampant thievery going on about him, which strikes me as being 
analogous to Mike Tyson lamenting the state of professional boxing:


NY Times, June 16, 2002
An Unlikely Clarion Calls for Change
By PATRICK McGEEHAN

Three years ago, it would have been hard to imagine anything that 
Henry M. Paulson Jr., the chairman and chief executive of the Goldman 
Sachs Group, could have done to draw public praise from Jon S. 
Corzine. Mr. Paulson had just engineered the ouster of Mr. Corzine 
from the top job at Goldman, one of the nation's biggest investment 
banks.

But last week, Mr. Corzine, now a Democratic senator from New Jersey, 
applauded Mr. Paulson's call in a June 5 speech for reform of the 
governance and auditing of American corporations. Despite some 
lingering animosity, Mr. Corzine joined Warren E. Buffett and some 
other business leaders in cheering Mr. Paulson for stepping forward 
when most of his peers have kept quiet.

"That's what corporate America ought to be doing right now," Mr. 
Corzine said, of Mr. Paulson's willingness to publicly address the 
issue. "People don't have real faith and confidence in the system. 
It's important that leaders of important corporations like Goldman 
Sachs speak out. It is in businesses' self-interest to get on the 
stick and do what Hank did and even go a step further."

Self-serving or not, showing up at the National Press Club in 
Washington to deliver a speech was an uncharacteristic act for Mr. 
Paulson, a man who does not relish the spotlight. He prefers fishing 
alone or bird-watching with his wife to moving and shaking on the New 
York social scene.

Loose and comfortable among clients and colleagues, Mr. Paulson, 55, 
often props his black wingtips on a coffee table and tucks his 
fingers into his belt. But he tends to stiffen when reading from a 
teleprompter and sometimes stumbles when he diverts from the script. 
(He referred to the club as the "Washington Press Conference" before 
he warmed to his task.)

Mr. Paulson said he knew he would come in for some criticism for his 
frank remarks ? his firm, after all, provided financing for some of 
the most troubled companies, including Enron, Tyco International and 
Global Crossing. Philip J. Purcell, the chairman of Morgan Stanley, 
for example, said Wall Street, which is being investigated for 
conflicts of interest, needs to clean its own house first.

But Mr. Paulson said he felt compelled to speak out after so many 
revelations about accounting shenanigans, market manipulation and 
self-dealing by executives that he says have presented American 
business with its greatest crisis in his lifetime.

"I wasn't putting myself or Goldman Sachs up as paragons of virtue," 
Mr. Paulson said on Friday. "But if you don't speak out on these 
things, it could be construed as tacit approval."

full: 
http://www.nytimes.com/2002/06/16/business/yourmoney/16HANK.html

-- 
Louis Proyect, vze47t8m@xxxxxxxxxxx on 06/16/2002

Marxism list: http://www.marxmail.org



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