WASHINGTON – Enron Corp. fired the Arthur Andersen accounting firm Thursday in the aftermath of the auditor's massive destruction of documents, said an attorney for the bankrupt energy giant.
"We're very troubled about the destruction of the documents, and we're very concerned about the accounting advice we got," said Washington attorney Robert Bennett, who is representing Enron.
Bennett said Enron informed Andersen of the dismissal late Thursday afternoon. Joseph Berardino, Andersen chief executive officer, acknowledged Enron's decision. "Obviously Enron has not rehired us," he said.
The firing came as congressional investigators pressed the accounting firm for more documents concerning Enron's business activities.
The House Energy and Commerce Committee released documents from Andersen showing that nearly a year ago the accounting firm had strong misgivings about Enron's use of partnerships that kept hundreds of millions of dollars in losses off Enron's balance sheet.
During a high-level meeting in early February, Andersen executives expressed concern about Enron's off-the-books accounting of profits from its partnerships, especially one headed by Andy Fastow, at the time also Enron's chief financial officer.
Summarizing the meeting, Andersen accountant Michael Jones wrote in an e-mail that the discussions "focused on Fastow's conflicts of interest ... and the amount of earnings Fastow receives" from the partnership while also Enron's financial officer.
Another document obtained by House investigators disclosed that last August Andersen officials were told that by Enron whistle-blower Sherron Watkins of her serious concerns about the off-the-books deals at Enron.
However, Andersen decided to continue to serve Enron. It estimated in its February meeting that fees from the energy company could reach $100 million a year and that the risks posed by Enron's business practices could be managed.
In a letter Thursday to Andersen chief executive Joseph Berardino, congressional investigators demanded all documents related to the meeting of Feb. 6, 2001.
A memo to David Duncan, Andersen's chief auditor on the Enron account, said the accounting firm should further investigate whether the Securities and Exchange Commission would go along with the Enron partnership arrangement. Duncan has told House investigators that no such investigation was done.
The Enron partnerships were key to the energy company's downward spiral that ended in bankruptcy on Dec. 2.
Enron on Nov. 8 acknowledged to the SEC that it had overstated its profits by $586 million as it shielded losses in partnerships, including the one headed by Fastow.