Client rallies for Andersen
As Congressional hearings into the Enron collapse continued in Washington yesterday, elsewhere an Andersen audit client Qwest Communications spokehighly of the firm's past performance.
At the end of a television interview intended to explain Qwest’s move to off-load its debts CEO Joe Nacchio was asked about his accountant. ‘Andersen hasbeen our auditor for a long time. (..) they’ve done a fine job and we’ve always been happy with them,’ he said.
Nacchio, whose company is suffering along with his rivals amid the downturn in the US telecom market, added that he is keeping a close eye on theEnron/Andersen situation.
While most companies have been reticent to publicise their opinions about the auditor, US politicians have been more outspoken.
Representative Billy Tauzin, chairman of the House Energy and Commerce Committee opened his committee’s hearing with some strong language: ‘We have found substantial evidence of illegal activity by Enron and its management. This activity served to deceive the public about Enron’s financial condition.’
‘We have also found that Enron’s auditor, Andersen, knew or should have discovered the fraudulent nature of the Fastow transactions. We have found that Enron’s financial statements violated numerous existing accounting rules,’ he added.
During his testimony yesterday a short-selling specialist Jim Chanos said: ‘We read the footnotes about Enron’s partnerships over and over again and wecouldn’t decipher the impact on Enron’s financials.’
Tauzin will haul in top Enron executives for questioning today. Former CEO Jeff Skilling is expected to testify while the company’s controversial former CFO Andrew Fastow, who is being forced to attend by subpoena is expected to plead the Fifth Amendment. His former colleague Michael Kopper wasalso subpoenaed.