Word: enronizing
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...this world, investors know which companies are shooting them straight at earnings time and which ones aren't; which ones have dangerous levels of debt and which ones don't; which ones are making money and which ones aren't. Which is critical. The rise and fall of Enron may have been merely part of "the genius of capitalism," as Paul O'Neill put it, but the genius of investor-based capitalism - that'd be our system - also depends on disclosure, on transparency, on every investor knowing what Ken Lay knew about Enron's financial habits when Ken Lay knew...
...that only works if the outside auditor isn't in-house, and Arthur Andersen was half in bed with Enron from the start. In a proportion common to the Big Five accounting firms, half the $52 million a year Arthur Andersen collected from Enron was for its accounting services, and half was for its consulting business. And much like Wall Street analysts have become loss-leaders for the investment banking operation down the hall, accountants - outside auditors - have become a way to get the firm's consultants, who make the big profits, in the door. Relationships get formed. Hands wash...
...chairman Arthur Levitt to back down from proposals to forbid accounting forms from doing consulting work. When the current scandal first started to bloom, Berardino insisted to Congress that 70-year-old accounting rules don't give auditors the tools to flag the kind of risky behaviors that got Enron in trouble - and that it's the laws governing client disclosure that are toothless, allowing an Enron to hide its shadiest deals from the poor auditors trying to uncover them...
...these days, Arthur Andersen doesn't look much like an accounting firm that didn't know enough. "Enron whistle-blower" Sherron Wadkins didn't just tell Lay in August about her fears that their company would "implode in a wave of accounting scandals" - she told a top man at Andersen, who then told three Andersen partners, including the recently disavowed David Duncan, who was overseeing the Enron audit...
...campaign check makes you will be fair-weather ones indeed. When it's all over, we may find that this Administration, with a war to worry about and a honor-and-dignity-of-the-office mandate to maintain, did indeed act with particular rectitude in this case despite its Enron ties (or, again, perhaps because of them). Maybe we'll decide that Republicans, who hob-nob with rich business leaders all the time, are therefore better inured against their more inappropriate requests...