Accounting Corp. Settles For $40M

Andersen Worldwide SC and its non-U.S. member firms will no longer be cited in a class-action lawsuit filed by former Enron shareholders, including the UC system, and are released from liability, a UC-system press release stated. System officials would not state how much money the system lost in its endowment because of the company's financial collapse.

The settlement is still subject to court approval.

The U.S.-based branch of the company, Arthur Andersen LLP and the Texas-based Enron Corp. are still defendants in the suit.

UC-system representatives said the lawsuit is not nearing its end.

"We regard this settlement as only a first step in obtaining recovery for the (all plaintiffs) and will continue to pursue damages from the remaining defendants," James E. Holst, the UC system's general counsel, stated in a press release.

In an amended complaint filed April 8, the UC system named Andersen Worldwide SC and several overseas Andersen firms as defendants in the lawsuit originally started in February.

The UC system broke off settlement negotiations with U.S.-based Arthur Andersen LLP last spring.

Under the terms of the settlement, Enron and its creditor committee can still be assessed for damages.

It is estimated that Enron shareholders lost more than $25 billion when the company filed for Chapter 11 bankruptcy last year.

Arthur Andersen executives have been charged with falsifying records for the Texas-based corporation.

Lawyers for Enron said the settlement demonstrates that even relatively minor actors like Andersen Worldwide SC can be held liable by Enron's investors.

Trey Davis, spokesman for the UC system, said it will still negotiate with other defendants if the opportunity arises. "It's a separate matter," Davis said. "The university is preparing to discuss reasonable settlements with other defendants."

In late 2001, Enron revealed it would incur losses of at least $1 billion and would restate its financial results from 1997 to 2000 and the first two quarters of 2001 to correct errors that inflated Enron's net income by $591 million.

Enron's stock dropped 91 percent, and Enron filed for Chapter 11 bankruptcy Dec. 2.

The State & National Editor can be reached at stntdesk@unc.edu.