Arizona’s attorney general is asking the federal government to compare the recent collapse of Enron with the alleged swindling of $600 million from investors in the Baptist Foundation of Arizona to see if accounting giant Arthur Andersen is guilty of a pattern of deceptive auditing.
Andersen was auditor for both the Texas energy giant that recently filed for bankruptcy and the Arizona Baptist Foundation, which went bankrupt in 1999.
Arizona Attorney General Janet Napolitano said Andersen’s role in the foundation collapse might light on what went wrong at Enron.
“I am very troubled by the similarities between the allegations against Andersen by Enron’s investors and the facts our office has discovered in our various investigations of Andersen,” Napolitano wrote in a Jan. 2 letter to three leaders in the U.S. Senate. “I am seriously concerned that Andersen has engaged in a pattern of deceptive auditing practices that have had the effect of defrauding the investing public, including the state of Arizona and the Arizona State Retirement System, out of hundreds of millions of dollars.”
The Baptist Foundation of Arizona matter along cost investors about $590 million, Napolitano said. Investor losses in Enron are estimated in the billions of dollars.
Congress and federal law-enforcement officials are investigating what role the accounting giant might have played in hiding Enron’s financial instability from investors. Andersen, meanwhile, currently is defending itself against allegations that its auditors were complicit in misleading investors about the true financial condition of the Baptist Foundation of Arizona.
(ABP)
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