Word: enronizing
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...While Enron suffered in silence last week, Andersen was tripping over its own attempts at damage control. Andersen has the most to gain by coming clean because if it doesn't, it stands to lose a lot of business. So with help from an army of just-hired p.r. agents, the Chicago company worked overtime to show that in its work for Enron, it was merely trying to serve a secretive and aggressive client who was pushing the envelope on accounting rules that aren't very clear anyway. Last week, two days after Time reported that Andersen ordered the destruction...
...abruptly fired David Duncan, who managed the Enron account in Houston, saying he had "without any consultation with others in the firm" organized the destruction of documents as Enron's losses mounted in October. Seeking to put as much distance as possible between the home office and a wayward Houston branch, the company pointed out that all shredding had ceased once the sec issued a subpoena in the Enron matter. As a former Andersen partner in Chicago told Time, "The issue of document deletion is entirely dependent on when the organization was aware that there might be a liability issue...
...Which explains why things got worse--much worse--for Andersen a few days later, when it was revealed that officials at the company's headquarters in Chicago had discussed the questionable Enron accounting very early in the game--in a conference call last Feb. 5. Enron was no longer a problem that Andersen's Houston office had kept to itself. Nor were the top Andersen officials worrying about the actions of some low-level, rogue Enron trader back on Feb. 5. What concerned the auditors that morning was how to account for losses piling up in an off-the-books...
...Andersen's understanding of Enron's strange business practices was extensive enough that Andersen executives, during the same conference call, contemplated dropping Enron as a client. That would have been a kick in the teeth for the auditing firm: Enron was paying Andersen some $50 million a year in auditing and "consulting" fees--and officials said in the conference call that they envisioned billings doubling in the coming years. Ultimately, Andersen decided to stick with Enron because, according to an e-mail record of the call, "we had the appropriate people and processes in place to serve Enron and manage...
...Washington, of course, the politicians weren't just firing Enron and Andersen; they were plucking them from their Rolodexes and sending back their gifts. Lawmakers of both parties--led by those in close contests this November--scrambled to give back hundreds of thousands of dollars in campaign contributions Enron employees had sprinkled across the political landscape last year. Just for good measure, lawmakers have launched seven separate Enron probes...