Wednesday, May 7, 2008

PBS FRONTLINE - Bigger Then Enron

"A Frontline investigation indicates that the Enron scandal is only the tip of an iceberg. ...

...[A]s Frontline demonstrates, the relationship between big accounting firms and the companies they monitor got dangerously cozy in the 1990s as consulting -- on taxes, partnerships, finance -- became a major source of revenue for the supposedly independent auditors.

'They clearly had a conflict of interest, and some of them abused the public they were supposed to serve,' says Arthur Levitt, a former chairman of the Securities and Exchange Commission. In 2000, Levitt proposed barring auditors from doing major consulting jobs for their clients. The accounting industry reacted like a dog protecting a meaty bone, pouring millions of dollars into lobbying -- and contributing to -- members of Congress.

Levitt shows Smith a letter from the congressional committee that controls the SEC's funding -- and thus, its existence -- warning him to ease up. He also has a letter from Enron's then-CEO, Kenneth Lay, urging him to cool it because Arthur Andersen's consulting was extremely important to his conglomerate's well-being. ...

It's such a gutsy, provocative public-service documentary, you wonder if PBS' president will get the sort of threatening letter Levitt got."

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