Andersen offers plan to settle

The Andersen accounting firm has floated a plan to settle dozens of lawsuits from its failed audit of Enron Corp., a move that represents a savvy strategy to force shareholders and creditors to negotiate jointly so that neither gets left out, legal experts say.

Such a tactic could also speed the resolution to the claims against the large accounting firm and end an anticipated hemorrhaging of clients and staff, industry observers said Thursday.

But the initial figures floated -- $600-million to $800-million, according to one attorney involved in the case -- may be too small to satisfy the claims of the competing interests of shareholders involved in a class action lawsuit and creditors, who are separately seeking restitution in federal bankruptcy court.

Andersen, which is the target of multiple federal investigations for its role in the failure of the Houston-based energy trader last December, provided little detail about its efforts.

"Reaching out to the groups affected in this case is consistent with our commitment to address the issues raised by Enron's collapse in a straightforward and constructive manner," Andersen said in a statement. "We think it is in the best interests of all parties to deal expeditiously and responsibly with what has occurred."

Andersen floated the idea in separate meetings with Enron creditors in its bankruptcy proceedings and a group of shareholders who have filed a class-action lawsuit seeking damages from the Chicago-based accounting firm.

The talks were first reported by USA Today and the Wall Street Journal reported the settlement offer Thursday.

During a conference call between attorneys in the class-action lawsuit last Thursday, lawyers for Andersen came on line "saying that Andersen was interested in talking about a settlement," said Trey Davis, spokesman for the University of California system, which on Friday was named lead plaintiff in the shareholders lawsuit. The UC System lost $145-million in pension and endowment funds in the Enron bankruptcy.

There have been "no substantive discussions," Davis added. "We have been the lead plaintiff in this case for only three business days. You can't have a settlement until we know all the facts in the case."

As a lead plaintiff, the university and its law firm manages the litigation on behalf of the other plaintiffs in the shareholders suit.

Charles Parker, a Houston attorney who represents New York and Florida pension funds in the class action, said Andersen's entreaty is "just the first round of what will be many rounds of discussion."

He said the initial figures aren't enough to satisfy the competing claims of all the interested parties in the Enron debacle.

"What we need is an independent assessment as to the ongoing viability of Andersen as a business enterprise and as to how much they can pay," Parker said.

The attorney said Andersen has about $250-million in insurance and could come up with hundreds of millions more from its operations. Parker and others also think that Andersen's 1,300 U.S. partners will have to make some sort of contribution in the form of a partnership assessment.

"But the only way they would pay is if they believed that Andersen had a future as a business enterprise," Parker said. "The fact is that this firm is worth more to everybody alive than dead."

"I don't believe you will see anybody agree to a settlement without a partnership call or assessment," said John C. Coffee Jr., an accounting expert and law professor at Columbia University in New York.

The worst scenario for Andersen is to have to negotiate a large settlement with veteran class-action law firm Milberg, Weiss, Bershad, Hynes & Lerach, which is representing the UC system, and then have to come back and deal with Enron's creditors separately.

Enron's Lay tried to lure Robert Rubin to board

WASHINGTON -- In 1999, former Enron chairman Kenneth Lay sent notes signed "Ken" to Robert Rubin, who was stepping down as Treasury secretary, and to congratulate Rubin's successor, Lawrence Summers.

Lay lobbied Rubin, to whom he offered a seat on Enron's board, and Summers with the same easy cordiality on issues affecting Enron, according to documents the Associated Press obtained from the Treasury Department.

The notes and letters show Lay pressed Enron's interests to Clinton administration officials. Rubin, who left the government in mid-1999, is chairman of the executive committee of Citigroup, one of the banks that lent hundreds of millions of dollars to Enron. Rubin called Treasury's undersecretary for domestic finance, Peter Fisher, last Nov. 8 to seek his intervention on Enron's behalf.

On May 14, 1999, after Rubin announced he was leaving his post, Lay wrote him: "If you are considering joining any corporate boards, I would like very much to talk to you. Given the way Enron has evolved, ... we badly need a person with your experience and insights . . ."

Rubin did not join Enron's board.

-- Associated Press

Florida may file separate lawsuit against Enron

TALLAHASSEE -- Florida may pursue its own lawsuit against Enron to recoup pension fund losses now that a judge has ruled it won't be the lead plaintiff in a class-action suit brought by several funds.

Tom Herndon, the director of the State Board of Administration, said Thursday that the agency, which invests the $94-billion state pension fund, is considering opting out of the class of retirement funds suing in federal court in Texas and pursuing a separate lawsuit against the bankrupt energy company.

The fund lost more than $300-million or less than a half percent of its value when the bottom fell out of Enron's stock price late last year. No benefits were affected.

-- Associated Press

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