re: Anyone know the auditor for WorldCom?? Alpha
<< I hope people don't have the view that this sort of stuff only happens in the US ? >>
AlphaCenturian, funny you should mention this. The Courier Mail had this article in today's business section. Some of these guys could write a cooking book. 'Corporate Cooking' that is.
HIH wanted to withhold facts, probe told Kylie Walker 26jun02
SOME senior HIH Insurance executives may have withheld crucial information from their auditors, the HIH royal commission was told yesterday.
The inquiry also heard that chief executive Ray Williams appeared to have ordered staff to conceal important facts from the auditor, Arthur Andersen. Counsel assisting the commissioner, Wayne Martin, QC, said that in September 2000, six months before HIH's $5.3 billion collapse, Arthur Andersen asked to see the in-house actuary's most recent overview of HIH's US operations. HIH's US chief executive Gary Castro e-mailed the request to his finance manager Bill Howard, saying that if the auditor was given that report it would see that HIH's claims reserves were $55 million short. Mr Howard forwarded that e-mail to group finance director Dominic Fodera, adding one line: "The S––t (is) about to hit the fan by the look of it."
"You don't need to be adept at the Times crossword to fill in the letters that are missing between the S and the T," Mr Martin told commissioner Justice Neville Owen.
Other documents would clearly imply that Arthur Andersen never received the report, he added.
"If that information is sustained by the evidence . . . it would lead to a conclusion that those involved in bringing about that result deliberately and wilfully concealed from auditors information which they knew to be material to the auditor's review of the accounts," he said.
Such a conclusion would "fall squarely" within the section of the commission's terms of reference concerning whether any laws may have been breached, Mr Martin said. He also said that e-mails might imply that chief executive Mr Williams may have been involved in keeping information from the auditors.
E-mails written in June 1999 referred to a request by "Ray" that an internal audit report on the operations of HIH's US subsidiary Great States Insurance Company (GSIC) not be brought to a meeting with Arthur Andersen.
"If, as might be . . . inferred from this, Mr Williams, the chief executive of the company, was party to a decision to deliberately conceal relevant material from the auditors, that as a matter of principle is a most serious thing," Mr Martin said.
"(It) would have of course run completely counter to . . . the stated commitment (of HIH) to the strictest legal and accounting compliance standards."
The series of e-mails between HIH's then American chief executive Tom Matson and internal auditor Greg Waters referred to the GSIC report being taken off the agenda for a meeting with Arthur Andersen.
"Ray was concerned that the policyholder dividend disclosures included in your report could have potentially comprised the ability of HIH America to achieve the June forecast result," Mr Matson wrote. The GSIC report showed that $11 million in policyholder dividends had not been declared.
The report stated the dividend reserve had been appropriated to cover other losses in the United States.
