IP: Australia's HIH insurer: prelude to Enron?

[David Farber <dave () farber net>]

> Date: Wed, 30 Jan 2002 15:44:23 +1100
> From: Nathan Cochrane <ncochrane () theage fairfax com au>
> To: David Farber <dave () farber net>
> Subject: Australia's HIH insurer: prelude to Enron?
>
> Hi Dave
>
> It appears the Andersen-Enron debacle may not be the one-off "financial 
> and not political scandal" that the Whitehouse claims it is. It appears, 
> from evidence presented in an Australian court yesterday into the demise 
> of insurance giant HIH, that the culture of pandering to clients' vested 
> interests is of pandemic proportion. HIH imploded last March, with debts 
> of $US2.8 billion.
>
> How much longer can Andersen resist the push to open all its clients' 
> books to scrutiny? And if it happened at Andersen, what's the betting it's 
> happening at other Big-5 firms as well? And how much longer will the 
> collapses continue before someone puts auditors on the same level as 
> terrorists?
>
> It should be noted that this is an allegation at the moment. Andersen will 
> have its day to refute the evidence, but it's pretty damning as anyone who 
> has spent any time around auditors will attest.
>
> Evidence of Andersen 'deception'
>
> By DAVID HUMPHRIES
> SYDNEY
> Wednesday 30 January 2002
>
> The accountancy giant Andersen may have taken part in a "deliberate 
> deception" to keep HIH afloat, the royal commission investigating the 
> insurer's $5 billion crash was told yesterday.
>
> "If the inference remains unshaken by any explanation provided by Mr (Jon) 
> Pye (an Andersen partner in Sydney), it raises a very serious question as 
> to the general integrity of the audit process by suggesting that the 
> auditors may have knowingly involved themselves in verifying accounts 
> which they knew to be false and, to that extent, have acted in conjunction 
> with that company and lent their aid to a quite deliberate deception," 
> counsel assisting the inquiry, Wayne Martin, QC, told the hearing.
>
> ...
>
> Mr Martin said Andersen relied on HIH's internal auditing and the analysis 
> of HIH's consultant actuary, David Slee, when indeed Mr Slee was relying 
> on the insurer's analysis. Andersen's $1.7 million fee "obviously provided 
> a significant incentive to continue with the engagement", Mr Martin said.
>
> MORE
> http://www.theage.com.au/news/national/2002/01/30/FFXTG8MK0XC.html
>
>
>
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