New York Bankruptcy Judge Prudence Carter Beatty — who is overseeing the Delta Airlines chapter 11 case — is apparently somewhat of a live-wire on the bench. The airline pilots union has already asked her to recuse herself over remarks she made from the bench regarding the pilots’ compensation, and this Wall Street Journal ($) article reports on several barbs that the judge has tossed from the bench during hearings in the Delta chapter 11 case, including the following:

Yesterday, when Delta’s labor attorney asked the company’s chief financial officer, on the witness stand, what Delta did when it found itself falling behind in meeting financial targets, the judge interjected, “They did what everyone else did: engage in creative accounting.” Amid laughter, the judge continued, “It’s what Enron did, what WorldCom did.” The executive replied, “That’s absolutely not the case.”

So, how would you like being an auditor?
First, Arthur Andersen was prosecuted out of business by the Justice Department in an ill-advised prosecution.
Next, KPMG almost melted down in the face of a criminal investigation into its promotion of tax shelters, and still might not be out of the woods, yet.
Meanwhile, the other largest US accounting firms — PriceWaterhouseCoopers, Deloitte Touche, Ernst & Young and Grant Thornton — all have had problems of their own.
In such an intensely adverse environment, one can only speculate on how many of these firms have been propped up with the infusion of revenue that has been generated over the past couple of years from the gravy train of the Sarbones-Oxley legislation.
But even the benefits of Sarbones-Oxley are not without another swift kick in the rear. The Public Company Accounting Oversight Board — created under Sarbones-Oxley “to oversee the auditors of public companies in order to protect the interests of investors” — has been issuing inspection reports this year in which it has been evaluating the Big Four and other auditing firms’ audits of several undisclosed publicly-traded companies.

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Fraud trials have come a long ways in Chicago since the days of Al Capone as federal prosecutors in the Windy City announced the indictment on Thursday of newspaper entrepreneur Conrad Black and three of his former associates in connection with an alleged fraud scheme that took place while Mr. Black controlled the giant newspaper company, Hollinger International Inc. Charged along with Mr. Black were Jack Boultbee and Peter Atkinson, who were both former vice presidents of Hollinger, Mark Kipnis, the company’s former corporate counsel, and Ravelston Corp., a Canadian company that Mr. Black used to gain control of Hollinger. Mr. Kipnis was charged with fraud in August along with former Hollinger chief operating officer David Radler, who has already copped a plea under which he will serve 2.5 years in the pokey in return for cooperating with prosecutors. The Justice Department’s unusually long press release on the indictment is here.
The indictment contends that the fruits of the fraud were a couple of Park Avenue apartments, a corporate jet, a trip to the South Pacific and over $50 million in allegedly unauthorized payments to executives. Mr. Black and the others are accused of diverting more than $32 million from Hollinger through a byzantine series of transactions that the indictment frankly does not describe well. The indictment also alleges that Mr. Black was involved in the fraudulent diversion of an additional $51.8 million in 2000 from Hollinger’s sale of assets to CanWestGlobal Communications Corp.

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