Plante & Moran named to work on Enron case By Katie Merx• September 23, 2002

Southfield-based Plante & Moran L.L.P. is the newly appointed accountant in the court-ordered investigation of Enron Corp.'s collapse, according to documents in U.S. Bankruptcy Court.

Local bankruptcy experts estimate that the engagement is worth $2 million to $5 million a month and could last for two to four years.

Local executives said a team of Plante & Moran accountants has been in Texas for at least a month poring over documents in the offices of the bankrupt energy trader.

Plante & Moran executives said they couldn't comment on the engagement other than to confirm that a court-appointed examiner had retained the firm.

Documents filed in the bankruptcy case report that an Enron examiner retained the regional accounting firm July 22 to assist in the investigation of all financial transactions by Enron or its entities.

Specifically, the court wants the examiner and Plante & Moran to investigate the off-balance-sheet arrangements, hedging strategies, improperly recorded transactions, transactions omitted from financial statements and transactions of all special-purpose entities created by or on behalf of Enron and its entities.

"It's a huge case, enormous," said Barbara Rom, a partner and bankruptcy attorney at Pepper Hamilton L.L.P. in Detroit.

Rom estimated that Plante & Moran would earn $3 million to $5 million a month and speculated that a case that large with such numerous and complicated transactions easily could keep the firm busy for two to four years.

At those rates, a year's worth of service likely would be worth more than the $17.1 million in annual fees that Ford Motor Co. paid PricewaterhouseCoopers L.L.P. in 2001.

Even a three-month stint, the shortest that local experts could fathom, likely would surpass the $6.7 million in audit fees that Delphi Corp. paid Deloitte & Touche L.L.P. in all of 2001.

"That's a major job," said Joe Whall, a forensic accountant and president and founder of The Whall Group Ltd. in Auburn Hills. But how much the deal is worth will depend on a lot of factors that are unknown at this time, he said.

The fact that Enron has about 3,000 entities in itself makes it a huge assignment, Whall said. But how long it will take will depend on how many accountants and personnel Plante & Moran assigns to the case, how much time they spend each week, how easily they can discover evidence and how willing people outside the courtroom are to help.

Barry Lefkowitz, a bankruptcy expert and CPA with Zalenko & Associates P.C. in Southfield, speculated that the firm would assign 10-20 accountants to Enron.

Jim McTevia, chairman of the Eastpointe-based turnaround consultant McTevia & Associates Inc., said he would guess that the firm would assign 20-25 accountants.

With an average billing of $250 an hour for 40 hours a week for at least 90 days, he estimated the minimum bill would be $3 million. That's about what Visteon Corp. paid PricewaterhouseCoopers for its 2001 audit fees and nearly three times what Comerica Inc. paid Ernst & Young L.L.P. for its 2001 audit and audit-related services.

McTevia said he was surprised that a regional firm such as Plante & Moran landed such a large engagement, calling it "very highly unusual."

But Lefkowitz said he wasn't surprised. Enron was so large, he said, that the nation's largest firms likely had conflicts of interest.

Plante & Moran is a good-sized firm with a reputation for being strong and respectable, he said. The Public Accounting Report lists the firm as the 11th-largest CPA firm. On its Web site, it reports a total staff of more than 1,200 and more than 600 CPAs.

Additionally, he said, Plante & Moran has a specialty group that does fraud and litigation work.

Katie Merx: (313) 446-0337, kmerx@crain.com

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