New York Post column
By Dick Morris

January 29, 2002 -- DEMOCRATS seeking to blame President Bush and the GOP
for the Enron scandal need to look more closely at their own house -
especially at the work done by the former Democratic National chairman, Sen.
Christopher J. Dodd.

While many candidates of both parties have received campaign contributions
from Enron and its "independent auditor" Arthur Andersen, very few have
passionately fought their cause in Washington as diligently as Chris Dodd.

It was on account of Dodd's tireless efforts that Arthur Andersen was able
to act as both "independent auditor" and management consultant to Enron for
$100 million a year. That role - so fraught with conflict of interest that
it makes a joke of the concept of outside auditors protecting shareholders -
has been identified as one of the major causes of the debacle.

In 1995, it was Dodd who rammed through legislation, overriding President
Clinton's veto, to protect firms like Andersen from lawsuits in cases just
like Enron. The Dodd bill limited liability for lawyers and accountants for
"aiding and abetting" corporate fraud by their clients, making them liable
only for their "proportionate" share of the blame, rather than for the
entire fraud.

So, if an accounting firm kept secret the true picture of a corporation's
finances, it would only be liable for part of the total fraud on the
investors.

For shareholders, this law is awful - the fraudulent company has usually
lost nearly all its value before the shareholder learns about it, so there's
nothing left. For the accounting firm, though, it's great - the shareholders
can't pin the total losses on you.

And from Andersen's point of view, it was really wonderful, because they
were already facing thousands of lawsuits for their role in securities
fraud.

A grateful accounting industry showed its appreciation to Sen. Dodd by
contributing $345,903 to his campaign between 1993 and 1997. Every major
accounting firm pitched in - Deloitte & Touche, Ernst & Young, Coopers &
Lybrand, Peat Marwick, Price Waterhouse. (Dodd has received more money from
Arthur Andersen than any other Democrat - $54,843.)

>From '93 to '97, Dodd also received $523,551 from the securities industry,
which was thrilled with other provisions of the '95 law that limited
liability from securities lawsuits, notably for firms that failed to live up
to their predictions about future earnings.

Consumer groups had opposed the legislation - the U.S. Public Interest
Research Group labeled it "The Crooks and Swindlers Protection Act."

But Dodd's services to Andersen didn't stop there. Every analysis so far of
the Enron scandal lays much of the blame on the conflict of interest that
Andersen faced in auditing and consulting for Enron at the same time.

Auditors must be independent to assure that companies do not report
misleading financial data to stockholders. Once Andersen was getting up to
$100 million a year in consulting fees from Enron, does anyone really
believe that they would have blown the whistle on the firm's shady books?

But when the SEC tried to bar this practice, so ridden with conflict of
interest, it was Chris Dodd, along with Rep. Billy Tauzin (now R-La., though

a Democrat until August 1995), who according to the Associated Press
"brokered a deal" to stop the SEC action.

As a result of Dodd's intervention, the SEC agreed not to issue a ban on the
practice of auditing and consulting for the same client. Such practices have
led to what Sen. Barbara Boxer (D-Calif.) called "the kind of hide-the-debt
shell game that took place at Enron."

In an ultimate act of hypocrisy, Dodd has now actually introduced
legislation to ban accounting firms from doing consulting for companies it
audits - precisely the same policy he killed when the SEC was considering
it.

Now that this issue is in the public eye, Dodd is pretending to be an
advocate for the shareholders. But the Enron workers who lost their pensions
and the Enron shareholders who lost their portfolios know it is too late for
them. And Arthur Andersen knows it makes no difference to them now.

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