Andersen lawsuit talks collapse

The accountancy firm, Arthur Andersen, has announced that talks to settle huge civil lawsuits against it in connection with its alleged role in the collapse of energy giant, Enron, have broken down.

In a statement, Andersen said it had failed to reach a settlement with several companies and investors who are seeking damages.

Unfortunately, the plaintiffs could not resolve several differences among themselves and with defendants other than Arthur Andersen

Andersen statement

They accused both Enron officials and Andersen of defrauding them by manipulating figures to conceal Enron's debts before the bankruptcy.

Andersen is also facing criminal action for allegedly destroying Enron-related documents.

"The mediation is terminated," Eric Green, the court-appointed mediator said.

According to the Andersen statement "during these discussions, considerable progress was made, but unfortunately, the plaintiffs could not resolve several differences among themselves and with defendants other than Arthur Andersen".

Regret

The firm expressed regret that the talks had failed to resolve the situation. The accounting firm had said it was ready to pay at least $300m to the plaintiffs.

"We worked in good faith over the last several months to resolve these matters to the benefit of all parties," the statement said.

The company is accused of destroying Enron records

Andersen was Enron's auditing and consulting firm prior to the energy giant's bankruptcy last December.

The US Justice Department has accused the Chicago-based auditor of destroying records from its Enron audits after learning they were being sought by US securities regulators.

Settlement talks could restart, but a quick resumption is not expected, sources close to the discussions said.

Trying times

A spokesman for the lead plaintiff, major Enron shareholder the University of California Board of Regents, said there were too many complex issues that could not be worked out.

"Without their resolution, any settlement would have worked to the detriment of the class," spokesman Trey Davis said in a statement.

The collapse of the talks comes as the embattled firm are already on trial in Arizona in another major civil suit related to accounting fraud.

The trial, in which Andersen is charged with failing to detect a fraud being perpetrated by the Baptist Foundation of Arizona (BFA), one of its audit clients, is expected to drag on until July.

It began on Tuesday with Andersen 's lawyers saying the firm was duped along with BFA investors, and denied it had a hand in any wrongdoing.