Andersen worldwide settles Enron lawsuits

Andersen Worldwide SC, the international umbrella organisation of auditing firm Arthur Andersen LLP, has agreed to pay $40m to settle lawsuits from Enron investors and employees.

Andersen Worldwide SC, the international umbrella organisation of auditing firm Arthur Andersen LLP, has agreed to pay $40m (€40.8m) to settle lawsuits from Enron investors and employees.

The settlement is the first to emerge from a €25bn (€25.5m) lawsuit filed on behalf of Enron investors, led by the University of California, and another lawsuit filed by former employees in the aftermath of the failed energy company’s swift collapse last year in a swirl of accounting scandals.

Andersen Worldwide serves as the co-ordinating entity for the international network of Andersen firms including Arthur Andersen LLP, its Chicago-based US arm. Arthur Andersen LLP remains a defendant in the suit.

“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, most of whom had far deeper involvement in the Enron debacle than the overseas Andersen firms,” said James Holst, general counsel for the university.

Bill Lloyd, an attorney with Sidley Austin Brown & Wood in Chicago who helped negotiate the settlement, declined to comment yesterday. Arthur Andersen LLP spokesman Patrick Dorton also declined comment.

The settlement is subject to approval of US District Judge Melinda Harmon in Houston. The university said the €40m (€40.8m) settlement includes $15m (€15.3m) that will be available to pay for costs associated with the suit, but not attorney fees in the ongoing litigation.

Robin Harrison, one of the attorneys who represents employees, said lawyers haven’t yet determined how to distribute the money.

Andersen Worldwide denied any liability or wrongdoing with regard to Enron, the university said.

In April, Andersen Worldwide said Arthur Andersen LLP, which was Enron’s outside auditor for 16 years until fired in January, was the only proper defendant in claims relating to audits of faulty financial statements.

The US arm, like other offices around the world, operates autonomously from the umbrella organisation, 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 firm has lost hundreds of clients and offices throughout the US. In other countries, clients have bolted to join other firms.

The firm, which has said it expects to formally end any remaining audit business next week, will be sentenced by Harmon on October 17.

Negotiations to settle civil claims against Arthur Andersen LLP broke down before the obstruction of justice trial began on May 6.

Negotiations to settle claims against Andersen Worldwide and Andersen firms outside of the US then began, the university said.