Pennzoil, a motor oil company, said it would lower its stated net income by a total of $3.3m for the years 2001, 2000 and 1999 because of an error in the consolidated statements of Excel Paralubes, a joint venture of Pennzoil and Conoco Inc.
This could put another cloud over Andersen, but Pennzoil said that it depended on audit reports of PricewaterhouseCoopers, Excel’s auditor, for its information on the venture.
Meanwhile, Global Crossing insisted its accounting and reporting were ‘entirely appropriate’, but at the request of Andersen and its own audit committee, the company was forming a special committee and hiring outside counsel and an accountant to examine allegations made by former employee Roy Olofson.
Global Crossing did not show Andersen a letter written last year by Olofson, the former vice president of finance, until last week.
Olofson’s letter claimed the company had inflating its earnings and cash flow to make its financial performance look better than it actually was.
Also yesterday Ken Lay resigned from the board of Enron. Following his refusal to appear before a hearing scheduled for yesterday, the Senate Committee on Commerce, Science and Transportation expects to vote today to subpoena the former CEO.
One politician argued that if Lay did not know what was going on at Enron he must be the most ‘out for lunch CEO’ of corporate America.
Following his appearance at a Financial Services Subcommittee hearing SEC chairman Harvey Pitt said yesterday: ‘We’ll come down like a sledgehammer on any improper relationships.’