“In my opinion, the problem today is 10 times worse than it was when Enron had its implosion in what was called the era of corporate fraud,” said Fastow. “The things that Enron did, and that I did, are being done today. In many cases, they’re being done in such a manner that makes me blush, and I was the CFO of Enron.” [AT]
Related Posts
Release of Satyam Founder Ensures That No Progress Will Be Made in the Investigation for the Foreseeable Future
We’re getting used to this.
Chances of a speedy resolution to l’affaire Satyam receded on Wednesday with the Andhra Pradesh high court granting bail to the company’s founder and former chairman, B. Ramalinga Raju, freeing, albeit temporarily, the last of the accused in a corporate fraud that came to light in early 2009 with Raju’s confession and whose magnitude has since doubled to a claimed `14,000 crore.
Raju’s release is a setback for India’s federal investigating agency, the Central Bureau of Investigation (CBI), which is yet to produce him in court in person. Arrested on 9 January 2009, Raju has been undergoing treatment for Hepatitis C at Nizam’s Institute of Medical Sciences, Hyderabad.
On 16 August, he retracted his confession in the trial court by responding in the negative to questions posed by the court about the fraud. The burden of proof for Raju’s fraud now rests with CBI. And now, he is out on bail—for two sureties of `20 lakh each.
India’s minister for corporate affairs Salman Khursheed insisted that Raju’s release would not “hamper the ongoing investigation”.
Satyam case weakens with Raju’s release [Live Mint]
Grant Thornton Gets Fired (Again)
Grant Thornton is having a helluva time keeping audit clients happy. After getting axed by Overstock.com in November, GT has now been fired by headphone maker Koss after it was discovered — by AMEX — that the company’s former VP of Finance had been embezzling millions of dollars since 2005.
In an 8-K filed yesterday, the Company stated that its financial statements from the past three years should not be relied on:
The Company has now concluded that its previously issued financial statements on Forms 10-K for the fiscal years ended June 30, 2005 through 2009 and on Form 10-Q for the three months ended September 30, 2009 should no longer be relied upon due to the unauthorized financial transactions.
A couple of commenters were debating this particular SNAFU over the Holiday break and while GT may not be responsible for discovering embezzlement, this is a perfect example of why small companies should not be exempt from Sarbanes-Oxley. As Guest 2 notes:
it looks like Koss will become the poster child for internal controls. The company clearly had to have deficient internal controls if the VP of Finance could use millions of dollars in company funds to pay her personal credit cards. We’re talking over $400,000 a month on average (if the $20 million figure is accurate) and that amount is clearly material to the company (i.e. that amount should not have gone unnoticed). My guess is that this will force all other small public companies to become full-pledged into 404 like the majority of public companies are.
We’d love to agree with Guest 2 but the simple fact of the matter is that Congress doesn’t give a rat’s ass about small companies complying with SOx. Most of the members have never even heard of Koss, especially since the company has a budget of around $0 for campaign contributions. Right now the only thing keeping the small company exemption at bay is the inability of Congress to move on financial regulatory reform, which is kinda sorta needed.
Headphone maker Koss fires auditor after firing VP [Reuters]
Tom Petters Was Pretty Sure He Was Going to End Up in a Dumpster Somewhere
Tom Petters doesn’t buy the whole Minnesota nice routine. Can’t say we blame the guy. If we were robbing people blind we’d be suspicious of every Marge Gunderson in the Twin Cities too.
According to a tape recording from yesterday’s proceedings, the stress of ripping people off for so long was causing him to freak out a little.
“Nobody’s paying us,” Petters said on the 30-minute recording made Sept. 22, 2008, by federal authorities with the help of Coleman. “I can’t stand lying to people every day.”
“We’re at a breaking point,” Petters said on the tape. “I can’t stand where we are. … None of us are OK. … We’ve got problems. I’m trying as hard as I can to find a way out of this. I don’t think we can all think clearly anymore.”
He said he was afraid that Robert W. Sabes, 69, formerly of Wayzata, and his son Jon R. Sabes, 43, of Wayzata, who authorities say had invested $17 million to $19 million, might kill him.
“Jon Sabes needs to calm down a bit,” Petters said, adding that he believed Sabes was connected to organized crime. “They are bad, bad people. I think he’d kill me.”
Now maybe this goes back to whole notion that TP had the attention span of a dog with above average intelligence (still a disservice to the breed in our book) but if you steal $19 mil from anyone, they’re going to want to kill you. Call it a hunch.
For the Sabes’ part, they may have had some shady connections but Tom Petters doesn’t strike us as the type of guy that attracted devout religious types. When reached for comment, Robert Sabes was quoted as saying, ‘I think he’s been watching “The Sopranos” too much.’
Yep. Pretty sure he was going to kill that guy.
Petters feared mob hit [Minneapolis Star-Tribune]