Lay Steps Down, Duncan Clams Up

Let the games begin.On the eve of the first two of nine scheduled Congressional hearings over the next five weeks, Kenneth Lay resigned as chairman and chief executive officer of Enron Corp., the company announced Wednesday evening.Lay, who will remain on the company’s Board of Directors, will be...

By Stephen Taub • Jan. 24, 2002

Whole Lot of Shredding Going On

Two things came to mind while we watched ABC News’ report last night claiming that Enron employees were shredding documents as recently as last week: First, if the allegations are true, did the employees really think they would get away with it? And second, why did Enron buy such crappy shredding...

By Stephen Taub • Jan. 22, 2002

Political Risk: Run for Cover?

On 9/11, in a matter of minutes, CFOs and their risk managers came smack up against a risk that until then seemed minor: terrorism. The problem, however, was that the insurers that covered the exposure had a similar encounter.Traditionally, companies bought terrorism coverage for both domestic an...

By Jennifer Caplan • Jan. 22, 2002

Workers’ Comp: End of an Error

Blame the insurance cycle.After years of minuscule rises in the cost of workers’ compensation insurance — and even a few decreases — rates are starting to go up substantially. Add in the impact of 9/11, and corporate managers could find themselves deep in the hole after paying their workers’ comp...

By Joseph McCafferty • Jan. 22, 2002

D&O Insurance: The House Hangs on to Its Money

Just a glance at recent class-action settlements in securities fraud should be enough to convince any sane CFO that cutting back on corporate directors and officers liability coverage is a bad idea.The payouts have been staggering. In late 1999, Cendant agreed to fork over a mind-bending $3.5 bil...

By Craig Schneider • Jan. 22, 2002

General Liability: Major Pain

Ask recent renewers of general liability coverage to characterize the market, and you’ll get three very different answers. A few will insist that policy costs are not actually increasing a great deal. Most others will say premiums are getting quite pricey. Still others will speak about mind-bendi...

By Marie Leone • Jan. 22, 2002

Property: Factory Seconds

Reality check No. 128:Take a walk around one of your company’s facilities. Check out the state of the sprinkler systems. Examine the thickness of the walls, the strength of the foundations. Run a few worst-case scenarios through your computer, simulating the effects of a fire, an earthquake, or b...

By David Katz • Jan. 22, 2002

Enron Was Economic–Not Accounting–Failure, Says Andersen CEO

Michael Odom, the head of risk management for Andersen’s Houston office, told congressional investigators that he was reminded of the firm’s document-disposal policy in an Oct. 12 e-mail he received from the auditor’s Chicago office. This, according to The Wall Street Journal.Odom’s statement see...

By Stephen Taub • Jan. 21, 2002

Wanted: Auditor. Must Be a Document-Saver, Work Well With Congressional Investigators

Embattled energy trader Enron went on the offensive on Thursday.First of all, the bankrupt energy trader fired Andersen as the company’s auditor? The reason? Because the accounting firm destroyed critical documents, said Enron’s management. “While we had been willing to give Andersen the benefit ...

By Stephen Taub • Jan. 18, 2002

Pro Forma Poster Boy? The Donald

Chalk up another first for billionaire real estate developer and self-professed financial wizard Donald Trump. Today, the Securities and Exchange Commission slapped The Donald with The First pro forma enforcement action ever.The cease-and-desist order stems from an SEC investigation into a statem...

By John Goff • Jan. 16, 2002

Paging Rose Mary Woods: Andersen Destroyed Enron Docs

Now here’s a first.In a truly bizarre twist to the Enron debacle, audit firm Andersen yesterday reported it had notified the SEC and the Department of Justice that employees disposed of “a significant but undetermined” number of electronic and paper documents relating to its audit of the now-bank...

By Stephen Taub • Jan. 11, 2002

A Graham of Prevention

John D. Graham isn’t a well-known Bush Administration official, even inside the Beltway. But CFOs ought to acquaint themselves with this bureaucrat in the Office of Management and Budget (OMB), since he is responsible for making sure federal regulations don’t impose too great a burden on business...

By Stephen Barr • Jan. 1, 2002

In 2002, Disclosure In, Employee Ownership Out

Warning to CFOs: Institutional investors are most concerned about corporate governance and disclosure issues.That’s the clear message coming from a survey of U.S. institutional investors conducted recently by Broadgate Consultants, Inc., an international corporate and capital markets communicatio...

By Stephen Taub • Dec. 26, 2001

Planes, Yes, Insurance, No

When the major U.S. airlines secured financial aid from Congress following the Sept. 11 attacks, it seemed like a lock that the insurance industry would also receive some sort of government help. The expectation: Congress would guarantee all 9/11-related claims above a specific dollar amount.Appa...

By Stephen Taub • Dec. 21, 2001

Found: One Former CFO

Andrew Fastow, the ex-CFO of Enron Corp. who was being sought out by the Securities and Exchange Commission and a few congressional committees, resurfaced Wednesday at a New York City news conference. Fastow, who was rumored to have fled the country, appeared with attorney David Boies. “This is n...

By Stephen Taub • Dec. 13, 2001

Forensic Detectives Back on the Case

Fraud DetectivesThe first known accountants were pairs of scribes who independently recorded daily transactions for the pharaohs of ancient Egypt. If their numbers didn’t match at the end of the day, explains Joseph T. Wells, chairman of the Association of Certified Fraud Examiners (ACFE), both w...

By Tim Reason • Dec. 13, 2001

Where in the World is Andrew Fastow?

Will he show?Apparently, that seems to be the big question surrounding former Enron CFO Andrew Fastow as a congressional panel kicks off hearings today. The panel will be conducted by two financial services subcommittees to determine whether there were accounting violations committed by Enron Cor...

By Stephen Taub • Dec. 12, 2001

Cost of Mitigating Risk Fell Last Year, Survey Says

Those were the days—or so it seems. Just last year, the overall cost of managing property-casualty insurance risk for U.S. and Canadian companies dropped to its lowest point in over a decade, a newly released benchmark survey says. Things should be a bit different this year–to put it mildly.But i...

By David Katz • Dec. 12, 2001

The Old Shell Game

Go into a casino and you have only yourself to blame if you leave with empty pockets. It’s much the same if you’re an equity investor in Asia, the U.S., or Europe.But that simple risk/reward equation goes haywire when you put your money into a subsidiary owned by some of the best-known companies ...

By Tom Leander • Dec. 10, 2001

Material Girl: SEC’s Unger Issues Report on Reg FD

SEC commissioner Laura Unger issued a detailed report examining the impact of Regulation Fair Disclosure on the marketplace.The commission adopted Reg FD in October 2000 to end the selective disclosure by issuers to analysts of material company information.“Regulation Fair Disclosure Revisited,” ...

By Stephen Taub • Dec. 7, 2001

U.S. Insurers Report $3.5 Billion Enron Exposure

Where there are huge losses, there is usually scrutiny of the effects on insurance companies. And the Enron debacle is no different.But so far, it seems like the insurance industry hasn’t been hurt much by the collapse of Enron. The direct exposure of U.S. insurers’ asset portfolios to securities...

By Stephen Taub • Dec. 6, 2001

Enron and on It Goes: More Investigations, Suits

Now the spotlight on Enron is being shined on the company’s retirement benefits. The Department of Labor has opened an investigation into questions raised by Enron’s handling of its workers’ retirement benefit plans, according to Labor Secretary Elaine Chao. Chao also announced that the departmen...

By Stephen Taub • Dec. 6, 2001

USA Network Cancels the Guidance Game

The CFO of USA Networks Inc. has found a way to break free of the dreaded earnings-expectations game with Wall Street. Along with the release of its third-quarter results on October 24, the New York- based media and commerce company disclosed its internal operating budget–yes, its entire annual p...

By Stephen Barr • Dec. 5, 2001

Enron Blame Game: Accountants Take the Offensive

Clearly on the defensive following the swift, spectacular collapse of Enron Corp., the accounting profession took several steps on Tuesday to try to preserve its image, trust, and integrity. In a remarkable, nearly unprecedented development, the Big Five accounting firms — Andersen, KPMG, Deloitt...

By Stephen Taub • Dec. 5, 2001

Question Mark to Market: Energy Accounting Scrutinized

The remarkable collapse of Enron Corp. is drawing attention to the accounting practices of other energy companies. The big concern seems to be “mark to market” accounting, which allows companies to count as current earnings profits they expect to earn in the future from energy-related contracts.T...

By Stephen Taub • Dec. 4, 2001