Enron To Arthur Anderson -
'Play It Again Sam'

By Stuart H. Rodman

They say he acted alone and so they had to let him go. That's what Arthur Anderson wants us to believe about the behavior of fired partner David B. Duncan after he reportedly ordered the destruction of critical Enron documents. The documents may have otherwise provided a clear audit trail for understanding the multibillion dollar shell game practiced by the now bankrupt energy giant which should be called "Where's the Debt?
Just an isolated act of bad judgement?
Well, consider another Arthur Anderson story that we might all be hearing alot more about in the weeks ahead. Its not news, in fact it happened about three years ago, but you might be surprised when you hear the names of the key players.
To start, let's go back about a year ago to May 2001. According to a report by Bob Allen of the Associated Baptist Press, on one hot day in Phoenix, about 50 people "braved the heat to picket accounting firm Arthur Anderson's Phoenix office".
Well, whatever for?
It appears that one of the firm's clients at the time, The Baptist Foundation of Arizona, was preparing to leave about 13,000 investors high and dry in a $590 million dollar bankruptcy filing of their own.
Says Allen,
"It was one in a series of organized protests to draw attention to alleged negligence by Andersen that court documents say allowed foundation officers to defraud trusting investors out of millions of dollars."
D'eja Vu
Reportedly having assets in excess of $7 billion, "full service" accounting firm Arthur Anderson may have resources well suited to helping those who can afford to pay with more than just your run of the mill shell game. Over a year ago, Allen reported that,
"Andersen has been named in both civil suits and administrative actions for issuing clean audits while Baptist Foundation officials allegedly conducted a Ponzi scheme, recruiting new investors to pay off old ones."
Several foundation officers, meanwhile, face fraud and racketeering charges over allegations that they hid losses from potential investors."
In a separate report posted at, award winning reporter Terry Green Sterling notes,
"The long-ignored collapse of BFA is every bit as tragic as the Enron failure. In 1999, BFA filed for bankruptcy in Phoenix, leaving in the lurch 13,000 mostly elderly investors who collectively lost more than $590 million. Arizona Attorney General Janet Napolitano called the BFA collapse the largest bankruptcy of a religious nonprofit in the history of the United States."
So far the victims have received pennies on the dollar, many having been bilked out of their entire life savings. Until the latest Enron revelations, the media and most politicians turned a mute ear to their plight. Despite the enormity of the debacle at BFA and the apparent duplicity of Arthur Anderson, Sterling says, "the national press in its East Coast provincialism refused to cover the Baptist Foundation collapse in any meaningful way, if at all".
In fact though, Sterling says, "The long-ignored collapse of BFA is every bit as tragic as the Enron failure". She adds,
"BFA investors are Christian folk who live throughout the United States, men and women who assumed they'd invested their money wisely because they believed neither Arthur Andersen accountants nor the pious Southern Baptist salesmen who promoted BFA's high-interest notes would deceive them".
And many lost big.
"My father, who is now retired, lost nearly a million dollars over the course of several years", says an elder son. "He believed he was sharing his good fortune with men and women of honor and distinction, doing the right thing for his community and his faith. Now he is wiped out and broken."
Sterling, says "All of this explains why two Arizona attorneys general have tried to force Andersen to pay back the BFA victims. "
She adds,
"Currently, Andersen faces action by the Arizona Board of Accountancy and Arizona Attorney General's Office, as well as two ongoing civil lawsuits in state court alleging Andersen's accounting fraud deceived BFA investors. And several of BFA's key managers have been indicted for alleged white-collar fraud in state court, although all await their trials."
Sterling's report shows that there is much in common between Arthur Anderson s work for BFA and Enron. She refers to public records relating to the BFA collapse in Arizona where, in her own words,
Andersen is accused of:
· Ignoring or failing to thoroughly investigate shell companies created by insiders who   grotesquely enriched themselves while hiding BFA's mounting debt in "off balance   sheet companies."
· Ignoring knowledgeable whistleblowers.
· Altering documents.
· Ignoring well-known accounting industry "red flags" that indicate white-collar fraud    is taking place.
It has been suggested that the real story of fraud-ridden businesses Enron and BFA is not that they failed but that they were able to hood wink their investors and get away with it for as long as they did. But it could become more difficult. Recent public opinion polls reported by MSNBC suggest that a majority of Americans fear that misconduct by accounting firms is widespread and some in Congress are talking "Special Prosecutor". Still an accounting industry insider close to the BFA case says,
"Its about time that the public is able to see what most of us in the industry have advised against for so long. Unfortunately, the behavior of Arthur Anderson in BFA is standard operating procedure not only for them but across most of the nation's biggest accounting firms."
Arthur Anderson portfolio of services must be quite a bag of tricks. But then again, maybe that s why (or how) they get the big bucks.
So you corporate raiders eager to fend off those once trusting but suddenly curious investors, who you gonna call?
I guess we already know the answer.

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