PracticeAccounting FirmsLawsuit threat faces Andersen UK partners

Lawsuit threat faces Andersen UK partners

Andersen UK partners could face a lawsuit running into billions if creditors of Enron Europe decide to sue the company's former auditors.

At a creditors’ meeting on Friday, PricewaterhouseCoopers, administrators to the collapsed energy group, will lay out the options and give an estimate of how much can be feasibly recouped from the collapse.

At the top of the administrators’ agenda will be whether creditors should pursue the possibility of suing the auditors. Recoverable assets are estimated to be between £500 and £700m. Liabilities already exceed several billion pounds and the administrators have ‘a huge and complex task’ ahead of them.

As well as the financial claims, Andersen would potentially suffer further damage to its reputation if a hearing was to go through the courts. But one question that remains open is at whom creditors could direct any legal action.

A lawyer close to the profession said under UK law, Andersen could be viewed as a global entity, and not separate partnerships, so UK partners could be liable.

In response to the possibility of legal action in the UK, John Ormerod UK managing partner of Andersen told Accountancy Age: ‘There is no suggestion we have done anything wrong in relation to Enron Europe, so the thought of whether we could withstand claims is fanciful.’

Enron Europe’s four companies’ had 250,000 trading positions with 1,000 parties, said Neville Kahn, PwC administrator to Enron Europe. ‘There’s the problem of complexity of liabilities.’

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