`Chainsaw Al' Dunlap agrees to settle suit

Ex-Sunbeam chief to pay $15 million to shareholders

January 15, 2002|By KNIGHT RIDDER/TRIBUNE

Despite staunch denials of wrongdoing while head of Sunbeam Corp., Albert J. "Chainsaw Al" Dunlap has agreed to pay $15 million to settle a class-action lawsuit brought by shareholders who accused him and other former executives of manipulating the company's financial results.

As part of the same suit, shareholders received $110 million in a May settlement with the accounting firm Andersen. Shareholders alleged that the firm - formerly Arthur Andersen - lied and misled them about the financial condition of Sunbeam.

Andersen's involvement in the financial mess at Sunbeam has received greater attention recently because of the collapse of Enron Corp., which employed Andersen to audit its books. Andersen officials admitted last week to having destroyed documents related to Enron's finances.

Dunlap settled the suit so he can focus on defending himself against fraud allegations made by the Securities and Exchange Commission in a federal lawsuit, said Donald S. Zakarin, Dunlap's New York lawyer.

Dunlap, a turnaround specialist who earned the nickname "Chainsaw Al" for his reputation as a ruthless cost-cutter, makes an "absolute denial of any wrongdoing whatsoever," Zakarin said.

So why settle? "Lots of reasons. We're not going to discuss the whys or wherefores now."

Former Sunbeam officials who also settled were: Russell Kersh, a director and executive vice president of finance and administration; controller Robert Gluck; and Donald Uzzi, executive vice president of worldwide consumer products.

Sunbeam, a maker of small appliances such as toasters and blenders, also was named in the 1998 suit brought by its shareholders, but the action against it was stayed when the company filed for Chapter 11 bankruptcy protection in February 2001.

As part of the settlement, reached in mediation Thursday in West Palm Beach, Fla., Dunlap also agreed to pay $1.5 million each to a group of shareholders who filed suit in Texas and eight financial entities that had bought debentures.

The latter group claims losses of $40 million, according to its lawyer, Jeff Ross, of the Minneapolis law firm of Zelle & Hoffman. The debenture holders still are proceeding with suits against Andersen.

Meanwhile, all the plaintiffs will seek to collect on the directors' and officers' liability insurance coverage, which Ross said has a total value of $70 million.

The SEC has sued the four officers, as well as Andersen accountant Phillip E. Harlow, who oversaw the Sunbeam audits, alleging illegal conduct, including booking sales of products well before they were delivered.

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