Andersen to pay £40m on first Enron claims

Andersen Worldwide is to pay out $60m (£40m) to settle a first round of claims arising from its auditing of the collapsed energy trading giant, Enron.

The firm, which has seen its once mighty accounting empire reduced to ruins, last night confirmed it will pay $40m to settle claims by investors in Enron and former employees. It is expected to announce a further $20m for Enron creditors shortly.

But settlement is still dwarfed by the total $25bn investors and former workers are claiming they lost, and further large settlements are likely. While the humiliation of Andersen was sealed when its American business, Arthur Andersen LLP, was found guilty in June of obstructing justice in the Enron case, the claims against it have continued to mount.

The settlements were negotiated by Andersen Worldwide, which was named in numerous civil lawsuits. Arthur Andersen itself, which will formally end its accounting activities later this week, was not involved.

Andersen was found guilty in trial largely on evidence that one of the Houston-based partners of Arthur Andersen, David Duncan, had destroyed documents pertaining to the firm's audit of Enron, which declared bankrupcty in June. Even before then, large clients had been deserting the firm in droves.

The court's action also made it nigh impossible for the firm, which once boasted 85,000 employees worldwide, to stave off the swarm of civil claims against it. Although it is ending all auditing work, Arthur Andersen currently has no plans formally to dissolve itself.

Meanwhile, Enron itself yesterday put the bulk of its remaining assets up for sale, including the Oregon-based utility Portland General. Analysts said if the sell-off succeeded it would mean the end of plans to create a new company, tentatively called OpCo, from Enron's bankruptcy.