Enron Corp. - University of California | Office of The President

Andersen employees destroyed incriminating documents under the auspices of complying with
Andersen's document retention policy.
(e) Lincoln Savings/ACC. Andersen was also associated with this infamous
fraud perpetrated by Charles Keating. In 84 and 85, Andersen improperly issued "clean" or
unqualified audit opinions on the ACC/Lincoln financial statements. Those opinions were included
in ACC/Lincoln SEC filings and helped Keating promote an illusion of prosperity that was used to
market notes to investors. Thus, Andersen participated in the Charles Keating fraud that bilked
investors out of over $500 million. In 92, Andersen paid $30 million to settle the securities fraud
action. Andersen of course, did not learn a lesson from this experience. In fact, Partner Jay Ozer,
a member of the Andersen audit team on Lincoln/ACC, went on to be a key Andersen auditor on the
aforementioned Baptist Foundation of Arizona Scandal.
920. These cases demonstrate that for years Andersen has demonstrated a callous, reckless
disregard for its duty to investors and the public trust. Andersen's conduct throughout this period
displays an uncaring, calculated cost/benefit approach to ignoring fraud and improper accounting in
its audit engagements. As the facts above indicate, Andersen is unrepentant and would rather pay
hundreds of millions of dollars to settle these cases than actually rectify its improper behavior. In
essence, Andersen considers compromising its integrity and getting caught allying itself with
management's interests an ordinary and necessary cost of doing business.
F. Andersen Disregarded Major Indicators of Financial
Statement Fraud at Enron ("Red Flags")
(1) Andersen Knew the Risk of Fraud Was Extremely High
921. Andersen had direct knowledge of Enron's improper accounting as alleged herein.
Andersen also knew that the risk of fraudulent financial reporting at Enron was very high. In
designing and carrying out audit procedures, professional standards specifically require that auditors
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