Search the Internet          Tips  Sites: Finance, Investment

As Congress talks, US states act on Enron reforms

Minnesota Attorney General Mike Hatch is not waiting around for Congress to clean up the accounting mess left in the wake of Enron Corp's financial meltdown.

Hatch said on Tuesday he is planning to introduce at least one bill in the state legislature later this week to prohibit accounting firms licensed in Minnesota from auditing publicly traded companies, while also providing consulting services to them. He added that the bill will include a maximum level of consulting compensation, which is yet to be determined.

"It takes forever for Congress to do anything," Hatch said, adding that he would prefer the federal government lead the effort. "Hopefully, the states can goad the feds to act on this."

While US Congress holds hearings and numerous investigations of Enron grind on, many states are forging ahead with reforms to prevent similar corporate disasters.

The Minnesota proposal surfaced because of criticism of accounting giant Andersen's role as both auditor and well-paid consultant to Enron, which filed the biggest-ever US bankruptcy in December.

New York State Comptroller H. Carl McCall, a Democratic candidate for governor, last week urged Gov George Pataki, a Republican, as well as the New York Stock Exchange, to adopt tougher accounting standards. His plan would not only restrict accounting firms from serving as both auditor and consultant to the same company, but would also prevent accountants from auditing the same company's books for more than seven years in a row.

CONNECTICUT MULLS DISCIPLINARY ACTION AGAINST ANDERSEN

At least one state, Connecticut, was revving up an investigation into Andersen. On Tuesday, that state's board of accountancy issued a subpoena for documents and other information relating to the company's dealing with Enron.

"This subpoena issued today marks the first step in our investigation to determine whether disciplinary action against Arthur Andersen is appropriate and necessary," said Connecticut Attorney General Richard Blumenthal in a statement.

He added that the probe's goals include determining if legislation was needed to ensure the "safety and soundness" of accounting practices in Connecticut.

Workers' rights in the wake of the Enron debacle, which saw thousands lose their jobs and retirement funds, have also become an issue for states.

The Wisconsin state Senate on Tuesday passed a bill giving workers owed money by a bankrupt company priority over banks and other financial institutions when it comes to the distribution of a company's assets. State Sen Judith Robson, the bill's sponsor, said while the measure was in response to a company bankruptcy in her own district, the Enron debacle gave it momentum.

"I think people get it and understand that in the corporate culture of greed and deception, workers are being harmed," she said.

ALSO READ:
The Enron Saga