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CNN Live At Daybreak

House Committee Hearing from Head of Arthur Andersen

Aired February 06, 2002 - 05:16   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: Let's get more on the Enron mess. While the Senate Commerce Committee was voting to subpoena Kenneth Lay, a House committee was hearing from the head of Arthur Andersen, Enron's accountants.

CNN's Tim O'Brien brings us details on the latest with Enron.

(BEGIN VIDEOTAPE)

TIM O'BRIEN, CNN CORRESPONDENT (voice-over): The vote was unanimous to subpoena Kenneth Lay, as it was symbolic. Lay is expected to respond in person, but it appears all but certain he will then invoke his fifth amendment right not to incriminate himself.

SEN. CONRAD BURNS (R-MT), COMMERCE COMMITTEE: If you think he's going to tell us anything in this room, I'd probably eat my hat in front of the Senate steps, and that's kind of dry chewing.

O'BRIEN: Lay's lawyer called off a scheduled appearance yesterday, citing, among other things, news reports that senators were out to "pulverize" him. But that prospect did not scare off another big CEO, Joe Berardino of Arthur Andersen, Enron's former accounting firm. Perhaps it should have.

REP. GARY ACKERMAN (D-NY), FINANCIAL SERVICES COMMITTEE: Maybe it's better to be dumb than culpable. Your not knowing what was going on, if that's the case, is basically saying that you have squandered the integrity of your company.

JOSEPH BERARDINO, CEO, ARTHUR ANDERSEN: Congressman, we are still getting facts. You want me to give you conclusions without all the facts.

O'BRIEN: The fact that Berardino's firm helped Enron avoid paying income taxes in four of five years also was an issue.

UNIDENTIFIED REPRESENTATIVE: I wonder if you would be prepared to spread your wisdom to the middle class of this country, the poor suckers who actually have to work hard and pay taxes.

O'BRIEN: Berardino remained polite, but at times evasive, particularly when pressed as to whether his company had done anything improper. BERARDINO: It's a fair question, but I do think there are a lot of facts we don't know, like were we misled? Was there information withheld from us?

O'BRIEN: And Berardino proposed stiff penalties for any company official who would do that.

BERARDINO: We also need to give serious thought to making it a felony to lie, withhold information or otherwise mislead investors and auditors.

O'BRIEN: Berardino also proposed the accounting profession adopt a more flexible grading system of a company's finances rather than the simplistic pass/fail system it now uses.

(on camera): It was a grueling day for Berardino, four and a half hours with no break and many hostile questions. But he never claimed any fifth amendment right against self-incrimination, and when it was all over, it didn't appear he needed to.

Tim O'Brien, CNN Financial News, Washington.

(END VIDEOTAPE)

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