US accountancy firm Arthur Andersen has paid a $7 million (euro 8.2 million) penalty to end a Security and Exchange Commission investigation into charges it falsified audits for Waste Management to protect lucrative business relations.
The penalty is the biggest ever paid by one of the world's top five accountancy firms.
The US financial watchdog, the SEC, suspected Arthur Andersen, and four of its current and former partners, knowingly ignored irregular accounting practices by Waste Management that inflated its profit levels.
Arthur Andersen has neither acknowledged nor denied any wrongdoing.
"Arthur Andersen and its partners failed to stand up to company management and thereby betrayed their ultimate allegiance to Waste Management's shareholders and the investing public," SEC chief investigator Mr Richard Walker said in a statement.
The SEC said that between 1992 and 1996 Waste Management inflated its pre-tax profits of $1.48 billion and underestimated its expenses by over $148 million - a state of affairs the SEC said Arthur Andersen could hardly overlook.
In December 1998, Waste Management and Arthur Andersen agreed to pay $220 million to settle an investigation called by shareholders, who accused Waste Management of inflating its profits.
AFP
