There are readers out there who consider accounting and accountants boring. In the normal course of business, they may well be correct, but now and then something happens that can make the subject both interesting and intriguing. The story of Enron is such an occasion and it has striking parallels with the Burnett & Hallamshire case in the 1980s.

For aficionados of corporate buccaneering, that British coal mining company failed mainly because of huge debts parked off the balance sheet. Subsequently, UK accounting rules changed so that it is more difficult there to prevent hidden debts from accumulating and then exploding as has happened now in the U.S.

Next time you see an accountant, in his obligatory dark suit and quill pen, remember he could well be the person to bring chaos to the world's equity markets.

Public auditors are appointed by shareholders to give an independent assessment of a company's performance. It is the main way the owners can check the performance of management, and for this service auditors receive remuneration.

Enron has shown itself in a different league and, with the apparent help of regulators, auditors and bankers, it has bankrupted itself twelve months after being valued at well over Dh300 billion.

Unfortunately for the owners and investors, it would appear that the auditors have not been performing their duty and have been signing off financial statements knowing them to be wrong. In retrospect, it may well have been a case of the auditors trying to placate top executives and forgetting their responsibility to protect investors.

It is also reported that in addition to audit fees of around Dh100 million, the Enron auditors also received about the same amount again for 'consulting services'. Richard Causey and Jeffrey McMahon, two of Enron's senior financial executives, also worked for the auditors prior to joining the disgraced company. Some of these factors must impinge on the independence of auditors and whether there were conflicts of interest.

As the world's biggest bankruptcy and potentially its biggest fraud unravels, it is becoming readily apparent that off-balance sheet entities that were created to 'reduce risk' were, in fact, a cloak to defraud the owners.

In 2000, the company had a reported turnover of more than $100 billion; how much of that was real is now a mystery. The company created hundreds of transactions with entities that were not independent third parties and this in itself would have created many fictitious sales.

The Enron debacle, along with other high-profile cases, indicate that the accounting profession is in disarray. Just the mention of companies such as Cendant, Sunbeam and Waste Manage-ment will result in a nervous accounting twitch. Indeed to date, the largest settlement of an accounting case was for Cendant and that cost a major firm Dh1.2 billion.

Estimates are being bandied around that when all plaintiffs have finished with Enron's auditors, they could be up for between Dh35-50 billion in claims. Not only has the accounting firm to consider the huge monetary implication but also their loss of credibility in the marketplace.

In their own way, the benefactors and perpetrators of this scam are no better than terrorists. In their search for illicit funds, they have systematically robbed innocent people of their hard-earned income and pension funds.

At the same time, they have cost thousands of jobs and have brought nothing but misery to many families. One can only hope that they feel the full weight of the law and that they are locked up for a considerable period of time.

The auditors are not the only players in this scandal, the finger of blame can also be pointed at the lawmakers, bankers and management. For example, the U.S. Congress has consistently voted against attempts to tighten up rules relating to auditors.

Reports indicate that several committees have been established to look into the mess that is Enron. What is of interest to the outsider is the fact that of the 248 members appointed to these various committees, 212 have received money either from Enron or its auditors.

What is also worrying is the speed of the demise of the company. Even as late as last October, when the rumours started to circulate about Enron's massive concealed debt load, 16 out of 17 Wall Street analysts, who cover that company, rated it as a 'buy' or 'strong buy'. Little wonder that the man in the street investor was caught unawares.

The question that Gulf-based investors should be asking is whether this could happen again. The answer is not whether it will occur but when.

On the surface, the U.S. market is one of the tightest in the world; if it can happen there, it will happen anywhere. It will not be good news when it does and my feeling is that Enron has opened the doors for similar scandals to be brought out into the open. When that happens, the real losers will again be the investing public.