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

a blind eye to the numerous red flags at Enron and continued to issue "clean" audit opinions to
generate tens of millions of dollars in fees and thereby increase Andersen's partners' compensation.
(2) Andersen Documents Support Allegations That
It Knew of Improper Accounting
927. Not only did Andersen work with Enron's lawyers and bankers to participate in
creating improper accounting practices, several Andersen documents that survived Andersen's
destruction campaign also clearly illustrate that Andersen knew, and was concerned about, Enron's
fraudulent accounting practices, but ignored them or covered them up.
928. For example, on 12/18/99, Andersen PSG partner Carl Bass wrote an e-mail to
defendants Stewart and Neuhausen expressing his opposition to Enron's accounting for a particular
entity and that Andersen should not support the accounting.
929. On 2/4/00, Bass wrote another e-mail to Stewart expressing his opinion that a
particular SPE they had been discussing had no real substance, and that Bass was bothered by the
fact that Enron would receive the appreciation on its own stock that was contributed to the SPE.
Bauer, Cash and David Duncan also received the information in this e-mail. In an e-mail to Stewart
and Neuhausen three days earlier, Bass, when describing several transactions at a different
partnership, wrote, "this whole deal looks like there is no substance."
930. In another example, on 2/5/01, top Andersen executives from the national
headquarters in Chicago met via teleconference with top Houston and Gulf Coast partners assigned
to Enron to discuss whether or not to retain Enron as an ongoing client. The participants in this
meeting included Andersen's head of U.S. operations, defendants Swanson, Stewart, Jones, David
Duncan, Bauer, Jones, Lowther, Odom, Goolsby, Goddard, Bennett and partner Kutsenda. The
minutes of the meeting reveal that significant discussion ensued regarding the propriety of the very
accounting issues that ultimately caused the collapse of Enron, including:
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