ENERGY: US Congressional inquiries into the relationship between Enron and its auditor will examine the role of two of the collapsed energy traders' most senior executives, who previously worked for Andersen.
Mr Richard Causey, Enron's chief accounting officer, and Mr Jeffrey McMahon, chief financial officer, both held positions in the Houston office of Andersen. Both are expected to be interviewed by Congressional investigators in the next few weeks.
Andersen's Houston office was responsible for the audits of Enron, which collapsed last month in the biggest bankruptcy in US history. The relationship between client and auditor is under intense scrutiny by Congress and regulators, which could press criminal and civil charges over the affair.
Enron said that neither executive would comment, adding that it was standard for companies to recruit employees from their auditors. People close to some of the Congressional investigations expressed concern, however.
"Given the array of things that have happened, it's cause for heightened scrutiny," said one.
Andersen faces questions over the objectivity of its work for Enron, after it emerged that the firm earned $25 million (€27.7 million) for its audit last year and $27 million for other services. The Enron audit was one of its most lucrative worldwide.
Mr Causey, as a senior manager at Andersen, had primary responsibility for the Enron engagement. As chief accounting officer at Enron, he is likely to face questions over why the company once rejected amendments to the accounts proposed by the auditor. It later made the changes in restatements.
Mr McMahon took over as Enron's chief financial officer after the departure of Mr Andrew Fastow in October. Mr Fastow left after it emerged that the energy trader had suffered huge losses in dealings with off-balance-sheet partnerships that he once headed.
The consequent restatement of several years' accounts, all audited by Andersen, sparked a loss of investor confidence in Enron and the company's bankruptcy.
Mr McMahon began his career at Andersen in Houston, where he was audit manager in the company's energy division. Before joining Enron, he was chief financial officer at MG Natural Gas, part of Metallgesellschaft. He left in 1994, the year the German group almost collapsed after running up big losses in oil futures trading in the US. - (Financial Times Service)
