New York (May 10, 2002) -- The fallout from the Enron scandal has rocked more than just Andersen's reputation, as a Wall Street Journal editorial this week raised doubts about Securities and Exchange Commission Chairman Harvey Pitt's credibility.

The Journal editorial Wednesday criticized Pitt, who previously served as a lawyer to the Big Five accounting firms he now polices, saying that Pitt "hasn't helped his task of restoring trust in corporate governance by the way he's appeared to assist his former industry clients."

The editorial also blasted Pitt for an incident surrounding a meeting with Eugene O'Kelly, the new chairman of KPMG, which is under investigation by the SEC for its audits of Xerox. KPMG is also a former client of Pitt's. Media reports surfaced of an email O'Kelly later sent to KPMG's staff that said the Xerox probe came up during the conversation.

Pitt denied discussing any enforcement matter, including Xerox, in the meeting. According to an Associated Press report, Pitt noted in a letter sent this week to Rep. Billy Tauzin (R-La) and Rep. John Dingell (D-Mich.), that he is required to remove himself from matters involving KPMG and other former clients, and called the meeting with O'Kelly "perfectly benign." Pitt added, "In light of the concerns it has engendered, I have concluded that, in instances where a company or firm is under investigation by the (SEC), I will do my utmost to avoid even the appearance of impropriety in instances where such meetings could be misconstrued."

"Now is precisely the time…for a Republican Administration to have someone with credibility as its securities chief," The Journal continued. "Even before the KPMG dispute, Mr. Pitt did not look to be that man. He's gone too easy on his old friends in the accounting trade, especially in protecting the industry's lucrative consulting business. He lifted not a finger to help Paul Volcker rescue and reform Arthur Andersen; instead, he joined the rest of the industry in winking at, if not quite cheering for, its demise."

-- Electronic Accountant Newswire staff

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