Despite lack of lawsuit, Enron tries to secure settlement from Andersen

CEO tells employees negotiations under way

February 24, 2002|By NEW YORK TIMES NEWS SERVICE

HOUSTON - Enron is negotiating with its former auditors, Arthur Andersen, about settling any claims that Andersen mishandled the company's accounts, according to a voice-mail message issued Friday to employees by Enron's interim chief executive, Stephen F. Cooper.

Although Enron has not sued Andersen, the company has discussed a possible settlement with Andersen intended to be "global, universal, and so we can at least get that behind us," Cooper said in the message.

Any money awarded to Enron in a settlement would most likely go to its creditors.

The indications of the talks between Andersen and Enron came as Andersen sought to put together a broad settlement intended to extract itself and its partners from all of the lawsuits accusing it of mishandling the accounting of Enron's books, lawyers involved in the negotiations said.

The accounting firm is seeking to work out a deal that would keep any payments - which could reach as much as $1 billion - at a level that would allow Andersen to stay in business while satisfying the many claims against it.

To achieve such a settlement, Andersen would have to reach agreements with Enron's creditors, with the plaintiffs in the securities law cases, with the plaintiffs in pension fund cases involving Enron's 401(k) plan, with government regulators and with Enron itself, which has also been sued by many of the same plaintiffs.

All sides have an interest in keeping Andersen going, however, because the auditing firm, which generated revenue of about $9 billion last year, has the deepest pockets of any of those involved in the collapse.

Andersen's lawyers made a presentation to a committee of Enron's creditors Tuesday, and they have indicated to plaintiffs' lawyers that they will make a similar presentation to them soon.

One obstacle to settling the cases has been that the firm's lawyers were not sure whom to negotiate with until a federal judge named a lead plaintiff in the lawsuits.

U.S. District Judge Melinda Harmon selected the University of California, represented by the law firm Milberg Weiss Bershad Hynes & Lerach, as the lead plaintiff in the securities cases last week.

She told lawyers last week that she would also name a lead plaintiff in another group of cases, those involving pension funds.

In Washington, hearings into Enron's collapse are scheduled to resume this week, with Jeffrey K. Skilling, the company's former chief executive, and Sherron S. Watkins, the whistle-blower at the company, planning to testify on Tuesday.

On Wednesday, the Senate Government Affairs Committee plans to call analysts from four large Wall Street firms to testify about why they continued to recommended Enron's stock even as the company's finances were falling apart.

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