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Atlantic City Casinos May Have to Axe Andersen

17 March 2002

ATLANTIC CITY -- As reported by the Press of Atlantic City: ``Aftershocks from the Enron mess could soon hit the local casino industry.

``Half of the resort's six casino companies count on Enron Corp.'s indicted auditor, Arthur Andersen LLP, to audit their books. They are Trump Hotels & Casino Resorts Inc., Harrah's Entertainment Inc. and Sands parent GB Holdings Inc., which combined own six of the city's dozen casinos.

``Typically, state gaming regulators bar indicted companies and individuals from doing business with the casinos.

``...The state Attorney General or DGE could make an announcement about Andersen's status here as early as Monday, a person familiar with the matter said.

``Federal prosecutors on Thursday charged Andersen with obstruction of justice, alleging that the Big Five accounting firm destroyed documents and deleted files related to the Enron Corp. investigation.

``The Casino Control Commission in 1986 exempted Andersen from casino-service industry licensure, "but the commission specifically reserve(d) the right to re-examine the terms of this exemption should future conditions so warrant and to revoke, limit or place such restrictions thereon as the commission may deem necessary in the public interest," the agency said then in its order.

``...If New Jersey gaming regulators bar Andersen, it could force casino companies to change auditors even if other states' regulators do not bar the firm. It could be an especially big headache for Harrah's, which operates 25 casinos in 12 states.

``...The Harrah's board had already decided to retain Anderson for this year. But in its proxy statement filed eight days ago, Harrah's took the unusual step of telling shareholders, "If the stockholders fail to ratify the selection, the board of directors will reconsider retention of that firm."

``...One casino company, Hard Rock Hotel Inc. of Las Vegas, fired Anderson on Jan. 28. It hired Deloitte & Touche two days later..."

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