- Enron, the failed energy firm, was yesterday
likened to a pyramid-selling scam and was said to be possibly hiding billions
of dollars of debts that have yet to come to light.
-
- Robert McCullough, a forensic accountant
who will testify before Congress today, said an examination of just one
of the many offshore entities used to mask Enron's debts had found $2.7bn
in unreported losses.
-
- Professor McCullough, of Portland State
University, told the Today programme on BBC Radio 4 that he had been surprised
by the sheer magnitude of losses.
-
- The discoveries will make the task for
Enron's new chief executive all the more difficult. The company yesterday
confirmed that it has hired Stephen Cooper, a corporate recovery expert,
as interim chief executive and chief restructuring officer. Mr Cooper has
in the past helped to restructure struggling companies including Polaroid
and Federated Department Stores, which owns Macy's and Bloomingdales. Mr
McCullough said his initial findings had confirmed all the worst fears
of the whistle-blowing Enron executive who had warned the company could
"implode in a wave of accounting scandals".
-
- The venture studied by Mr McCullough
was dubbed Whitewing, which housed investments in Eastern Euro pean and
Brazilian utilities that had gone bad. Whitewing used money from insurance
companies and mutual funds to buy the bad assets and place them into an
offshore company called Condor.
-
- "Some $4.7bn of investments - failing
investments, as it turned out - were housed within Condor, taken off the
books so that investors would never be able to see the full impact,"
Mr McCullough said. "Our close review indicated that there were probably
unrealised losses of $2.7bn in this one set of investments alone"
-
- He said there is probably far worse still
to come out. "Our review of the single Whitewing group surprised us
by the sheer magnitude of the guarantees and investments hid den behind
it. We're hearing about 4,000 of these entities."
-
- Enron's spectacular collapse was triggered
after it announced a $1.2bn reduction in asset value after taking some
of the offshore entities on to its books - prompted by an outside investigation.
It recorded losses of more than $600m and admitted it had overstated profits
by a similar amount in the previous four years.
-
- In further developments, the House energy
and commerce committee piled further pressure on to Arthur Andersen, the
accountants which audited Enron. The committee has written to Andersen
demanding new information including a list of names of the members of staff
that took part in the shredding of key Enron-related documents.
-
- Hearings into the collapse continued
yesterday.
-
- Lawrence Whalley, the company's president
and chief operating officer stood down yesterday and will take up a position
with investment bank UBS Warburg, which has bought Enron's energy trading
arm.
-
-
-
- Billions Still hidden In Enron Pyramid
-
-
- By David Teather in New York The Guardian
1-31-2
-
-
-
- Enron, the failed energy firm, was yesterday
likened to a pyramid-selling scam and was said to be possibly hiding billions
of dollars of debts that have yet to come to light.
-
- Robert McCullough, a forensic accountant
who will testify before Congress today, said an examination of just one
of the many offshore entities used to mask Enron's debts had found $2.7bn
in unreported losses.
-
- Professor McCullough, of Portland State
University, told the Today programme on BBC Radio 4 that he had been surprised
by the sheer magnitude of losses.
-
- The discoveries will make the task for
Enron's new chief executive all the more difficult. The company yesterday
confirmed that it has hired Stephen Cooper, a corporate recovery expert,
as interim chief executive and chief restructuring officer. Mr Cooper has
in the past helped to restructure struggling companies including Polaroid
and Federated Department Stores, which owns Macy's and Bloomingdales. Mr
McCullough said his initial findings had confirmed all the worst fears
of the whistle-blowing Enron executive who had warned the company could
"implode in a wave of accounting scandals".
-
- The venture studied by Mr McCullough
was dubbed Whitewing, which housed investments in Eastern Euro pean and
Brazilian utilities that had gone bad. Whitewing used money from insurance
companies and mutual funds to buy the bad assets and place them into an
offshore company called Condor.
-
- "Some $4.7bn of investments - failing
investments, as it turned out - were housed within Condor, taken off the
books so that investors would never be able to see the full impact,"
Mr McCullough said. "Our close review indicated that there were probably
unrealised losses of $2.7bn in this one set of investments alone"
-
- He said there is probably far worse still
to come out. "Our review of the single Whitewing group surprised us
by the sheer magnitude of the guarantees and investments hid den behind
it. We're hearing about 4,000 of these entities."
-
- Enron's spectacular collapse was triggered
after it announced a $1.2bn reduction in asset value after taking some
of the offshore entities on to its books - prompted by an outside investigation.
It recorded losses of more than $600m and admitted it had overstated profits
by a similar amount in the previous four years.
-
- In further developments, the House energy
and commerce committee piled further pressure on to Arthur Andersen, the
accountants which audited Enron. The committee has written to Andersen
demanding new information including a list of names of the members of staff
that took part in the shredding of key Enron-related documents.
-
- Hearings into the collapse continued
yesterday.
-
- Lawrence Whalley, the company's president
and chief operating officer stood down yesterday and will take up a position
with investment bank UBS Warburg, which has bought Enron's energy trading
arm.
-
- Copyright Guardian Newspapers Limited
http://www.guardian.co.uk
|
