Andersen 'deception' claim in Oz

ACCOUNTANCY firm Andersen, already embroiled in the collapse of US energy firm Enron, may have taken part in a 'deliberate deception' to keep failed Australian insurance company HIH afloat last year.

An Australian government inquiry into the A$5bn (£1.8bn) collapse of HIH was told Andersen's conduct as the company's auditor raised 'a very serious question as to the general integrity of the audit process'.

Wayne Martin QC told the inquiry that HIH documents suggested auditors 'must or ought to have been aware of the falsity of those accounts'. He added: 'The auditors may have knowingly involved themselves in verifying accounts which they knew to be false and, to that extent, have acted in conjunction with that company and lent their aid to a quite deliberate deception.'

The HIH claims relate to the accounting treatment of a A$200m capital injection into a loss-making subsidiary, insurer FAI, acquired by HIH in 1999. Martin said evidence appeared to show that the transaction was 'backdated' to convey the impression that FAI remained solvent for the year ended June 2000.

Andersen's witnesses have yet to appear before the inquiry but the firm's counsel has warned against 'drawing conclusions from open and unchallenged observations'.