Andersen Worldwide to Settle Enron Lawsuits
Andersen Worldwide, the international umbrella organization that includes auditing firm Arthur Andersen, has agreed to pay $40 million to settle lawsuits from Enron Corp. investors and employees.
The settlement, announced Tuesday, is the first to emerge from a $25-billion 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 coordinating entity for the international network of Andersen firms.
Arthur Andersen, its Chicago-based U.S. arm, 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 E. 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 Tuesday.
Arthur Andersen spokesman Patrick Dorton also declined to comment.
The settlement is subject to approval by U.S. District Judge Melinda Harmon in Houston.
The university said the $40-million settlement includes $15 million that will be available to pay for costs associated with the suit, but not attorney fees in the 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, 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.
“This first settlement recovers millions of dollars for the class and demonstrates that even relatively minor actors may face substantial liability to Enron’s investors,” said Bill Lerach, the lead plaintiff’s attorney in the lawsuit.
Arthur Andersen was convicted in June of obstruction of justice as investigators were looking into Enron’s collapse.
The crippled firm has lost hundreds of clients and offices throughout the U.S. and other countries.
The firm, which has said it expects to formally end any remaining audit business next week, will be sentenced by Harmon on Oct. 17.