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Andersen Worldwide to Pay $40M to Settle Enron Claims

Andersen Worldwide, the umbrella organization that includes auditing firm Arthur Andersen, has agreed to pay $40 million to settle lawsuits from Enron investors and employees, plaintiffs' attorneys said Tuesday. The settlement is the first to emerge from a $25 billion class action filed on behalf of Enron investors and another from former employees. The suits are seeking much more from remaining defendants.

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The international umbrella organization that includes auditing firm Arthur Andersen LLP has agreed to pay $40 million to settle lawsuits from Enron Corp. investors and employees, plaintiffs’ attorneys said Tuesday. The settlement with Andersen Worldwide SC is the first to emerge from a $25 billion class action lawsuit filed on behalf of Enron investors and another from former employees following the failed energy company’s collapse last year in a swirl of accounting scandals. Plaintiffs’ attorneys say Andersen Worldwide — which coordinates the international network of Andersen firms but maintains it is not the parent company — played a minor role. The lawsuits are seeking much more from remaining defendants, including Chicago-based Andersen LLP, Houston-based Enron, executives from both companies and nine banks and brokerages. “We regard this settlement only as a first step in obtaining recovery for the class, and will continue to pursue damages from the remaining defendants,” said James Holst, general counsel for the University of California, which is leading the suit. Despite the settlement, Andersen Worldwide has denied any liability or wrongdoing with regard to Enron. Bill Lloyd, a Chicago attorney who helped negotiate the settlement for Andersen Worldwide, declined comment Tuesday; Arthur Andersen LLP spokesman Patrick Dorton also declined comment. The settlement is subject to approval of U.S. District Judge Melinda Harmon in Houston. The university said the $40 million settlement includes $15 million available to pay for legal costs, but not attorney fees. Robin Harrison, an attorney representing the employees, said lawyers haven’t yet determined how to distribute the money. In April, Andersen Worldwide said Arthur Andersen LLP, which was Enron’s outside auditor for 16 years until it was fired in January, was the only proper defendant in claims relating to audits of faulty financial statements. The U.S. arm, like other offices around the world, operates autonomously from the umbrella organization, Andersen Worldwide said. Arthur Andersen LLP was convicted in June of obstruction of justice for shredding and doctoring documents related to Enron audits. The crippled accounting firm has lost hundreds of clients and offices throughout the United States and the world. Andersen, which has said it expects to formally end any remaining audit business next week, will be sentenced by Harmon on Oct. 17. Negotiations to settle civil claims against Arthur Andersen LLP broke down before the obstruction of justice trial began May 6. Copyright 2002 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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