bumpy times.  gonna take alot of work to come back.  i'll fill you in some time.

-----Original Message-----
From: Nancy Sellers [mailto:Nancy.Sellers@RobertMondavi.com]
Sent: Thursday, October 25, 2001 11:13 AM
To: 'Jeff Dasovich'; 'Eldon Sellers'; Prentice @ Berkeley; Prentice
Sellers
Subject: FW: Enron Dumps CFO Amid Conflict Questions


You guys sure are in the news a lot!!  I think you should take over - it's
the only way out

-----Original Message-----
From: CFO.com_Newsletters@cfo.com [mailto:CFO.com_Newsletters@cfo.com]
Sent: Thursday, October 25, 2001 9:09 AM
To: nancy.sellers@robertmondavi.com
Subject: Enron Dumps CFO Amid Conflict Questions



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CFO.com's
Today in Finance


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Thursday, October 25, 2001
Circuit Breaker: Enron Dumps CFO Amid Conflict Questions

By Stephen Taub

Enron Corp. is set to replace CFO Andrew Fastow. As CFO.com reported in a
story earlier this week, Fastow's role in a limited partnership has raised
concerns about a conflict of interest. 

Fastow is succeeded by Jeff McMahon, who had been serving as chairman and
CEO of Enron's Industrial Markets group. From 1998 to 2000, McMahon was
Enron's treasurer. He resigned that post in part because he disapproved of
Fastow's role in running two partnerships, according to The Wall Street
Journal. 

"In my continued discussions with the financial community, it became clear
to me that restoring investor confidence would require us to replace Andy as
CFO," said Kenneth L. Lay, Enron chairman and CEO, in a statement. 

McMahon, 40, joined Enron in 1994 and spent three years in the London office
as CFO for the company's European operations. Upon returning to the United
States, McMahon assumed the post of EVP of finance and treasurer for Enron
Corp. In 2000, he was named president and COO of Enron Net Works, where he
focused on E-commerce activities. 

As reported on Friday, The Wall Street Journal said a limited partnership
organized by Fastow, who has been Enron's CFO since 1997, racked up millions
of dollars in profits from transactions conducted with the energy company. 

On Monday, Enron said the Securities and Exchange Commission requested
information regarding certain related party transactions. 

On October 16, Enron stunned Wall Street when it announced that it would
take a $1.01 billion after-tax charge for the September 30 quarter. 

Since the announcement, Enron's share price has more than halved. 

Fastow's dismissal seems to be an about-face for Enron. In a conference call
Tuesday, Lay said the partnerships were fully disclosed and took steps to
assure that there was no conflict as Fastow played both roles. Enron has
since dissolved the partnerships. 

"Obviously, the board and even the lawyers and auditors realized that there
would be an apparent conflict of interest there and the board prescribed
certain methods for it to be dealt with ... so Enron would never be
compromised," Lay said in published accounts. "We are very concerned [at]
the way Andy's character has been loosely thrown about in certain articles,
as well as the company's reputation." 

Predictably, on Wednesday at least two law firms - Stull, Stull & Brody and
Bernstein Liebhard & Lifshitz, L.L.P - filed class-action suits against
Enron, Lay, Fastow, and Jeffrey K. Skilling, the former Enron chief
executive who resigned in August. 

The suits allege that the defendants issued false and misleading information
that materially misstated the company's condition and prospects to the
investing public. Moreover, the suits argue that the company failed to
disclose material information necessary to make its prior statements not
misleading. 

The complaints charge that Enron issued a series of statements concerning
its business, financial results, and operations which failed to disclose,
among other things: 

* The company's Broadband Services Division was experiencing declining
demand for bandwidth, and the company's efforts to create a trading market
for bandwidth were not meeting with success, as many of the market
participants were not creditworthy. 

* The company's operating results were materially overstated, since Enron
failed to write down in a timely fashion the value of its investments with
certain limited partnerships - the partnerships that were managed by Fastow.


* Enron was failing to write down impaired assets on a timely basis in
accordance with GAAP. 

Read On! For More of Today in Finance
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