Waste Management, source of previous Andersen woes, fires firm

By

Posted 4:13PM on Friday, March 22, 2002

HOUSTON - Waste Management Inc., which stuck with Arthur Andersen LLP as its auditor despite two separate accounting lapses, has fired the accounting firm. Ernst & Young LLP will begin auditing Waste Management's books immediately, the nation's largest trash hauler said Friday, a day after its board unanimously approved the switch. "We simply feel that our responsibility to our shareholders dictated a review of our outside auditor (Andersen) at this time," said A. Maurice Myers, who was hired in late 1999 as chairman and chief executive after a $250 million revenue shortfall prompted a management shake-up. Andersen has been fighting to save its reputation and survive its role in the Enron Corp. scandal after being indicted on a charge of obstruction of justice for shredding documents. Chicago-based Andersen, which denies that it improperly destroyed documents, did not immediately respond to a request for comment Friday. Waste Management had been Andersen's largest embarrassment before Enron. The Securities and Exchange Commission alleged that Andersen inflated the company's earnings by more than $1 billion in the 1990s. In 1998, the trash hauler restated earnings from 1992-97 and Andersen paid Waste Management a settlement amount that never was disclosed. Last June, Andersen agreed to pay a $7 million SEC fine, though the firm did not admit or deny the agency's allegations that it "knowingly or recklessly" issued false and misleading audit reports. After a Houston rival bought Waste Management and adopted its name, the combined company's auditing work was performed out of Andersen's Houston office, Waste Management spokeswoman Sarah Voss said. Yet Waste Management again was forced to restate earnings in 1999 and Andersen paid the company $20 million as a result, Waste Management said last year. The two restatements cost Waste Management and Andersen more than $600 million in combined lawsuit settlements. Myers said the change in accounting firms was not a reflection on the current Andersen auditors checking the company's books. "This is a new Waste Management with a new executive team pursuing a new strategy," Myers said. "The selection of Ernst & Young is one more step in firmly establishing a new Waste Management."