An independent examiner in Enron's bankruptcy says accounting firm KPMG was "willfully blind" to the fraudulence of a series of financial transactions the energy company used to inflate its bottom line.
KPMG also knew that former Enron Chief Financial Officer Andrew Fastow, who managed the LJM1 and LJM2 financing vehicles, received about $40 million from the improper deals he helped arrange, the examiner says.
The conclusions come in an investigation into the roles three banks and two accounting firms played in Enron's collapse. They are part of a 457-page report submitted Thursday to Enron's bankruptcy court by Harrison Goldin, a former New York City controller.
The accounting firm denied the accusations in the strongest of terms, calling Goldin's report "utterly baseless and irresponsible."
This is the first time an accounting firm other than Arthur Andersen, now defunct, has been critically associated with misdeeds at Enron. Until Thursday, KPMG's role had gone largely undocumented.
In his report, Goldin also found another accounting firm, PricewaterhouseCoopers, was "grossly negligent" in preparing a fairness opinion for certain transactions involving LJM1 and Enron. The firm, known as PwC, relied on factual misrepresentations it knew were not justified from Enron executives, and the reports it prepared for Enron's board of directors were of no value.
There's no doubt it was partially involved, but was Arthur Andersen set up to take the full brunt of the Enron scandal? Probably. The firm also happened to be the auditors of a certain outfit also known for financial irregularities called Halliburton when its CEO was called Cheney. Destroying Andersen had multiple benefits of convenience for the entire White House — both the president and vice president.
Missing in action throughout these legal machinations are the Enron executives themselves (excluding former CFO Fastow and his lovely wife, Enron art buyer Lea Fastow). Kenny Boy and Skilling must have some sort of presidential magic force field of immunity surrounding their purloined estates.
Why is it that crimes involving enormous amounts of capital don't deserve capital punishment? This is, after all, Texas we're talking about.
