Blood in the Water

The sharks are in a frenzy as Enterprise is wounded by one of its own

"I would keep going back to John with further evidence and he kept saying 'no,'" Dunn testified at a hearing July 3. "I asked him, 'Don't you care about your fiduciary duty as CFO?"

Dunn testified that O'Connell "pounded his fist and said that he didn't care about his fiduciary responsibility -- what he cared about was accounting that would work for Enterprise."

In September, October and November 2000, Dunn says, he reported his concerns to two members of the company's business-ethics committee, but they discouraged him from making a formal presentation to the committee.

Enterprise CEO Andy Taylor
UPI/Bill Greenblatt
Enterprise CEO Andy Taylor

In December 2000, Dunn says that he told senior management that several accounting practices would have to change if the company was going to avoid a run-in with securities laws and regulations.

And Dunn alleges that Enterprise told him to submit false or deceptive information to the SEC. Dunn says he refused.

On January 4, 2001, Dunn was fired.

Four months later, he went to court, and Van Amburg posted the lawsuit on her firm's Web site.


They may be big St. Louis boosters and 2001 Citizens of the Year, but Jack Taylor and his son and successor, Andy Taylor, didn't turn to a St. Louis law firm when they needed help protecting their company.

Instead, they turned to San Francisco-based Folger Levin & Kahn and its senior partner Michael Kahn.

Mark Litow, Enterprise's general counsel, has long been a fan of Kahn's firm. When it was named in America's Greatest Places to Work With a Law Degree (1999), Litow gushed: "If all lawyers conducted themselves like those at Folger Levin, you wouldn't see the kind of criticism of lawyers that has become all too common."

Kahn's also a man with big political connections. After the lights flickered and almost went out in California, Governor Gray Davis appointed Kahn to head the state's negotiations with power companies. Kahn also chairs a commission that investigates judicial conduct and is widely recognized in California for his trial abilities.

But because he isn't licensed in Missouri, the St. Louis firm Thompson Coburn also appears in the case as local counsel, a function that usually entails nothing more than supplying a mail drop box, a runner to the courthouse and a conference room for depositions.

One of the first things Kahn did was get Van Amburg to cave in to a sweeping protective order from the plaintiff's counsel.

Although Dunn's lawsuit is filed in a taxpayer-paid court, presided over by a taxpayer-paid judge and alleges, among other things, that consumers were being ripped off, Kahn succeeded in keeping almost the entire proceeding shielded from public inspection.

Roomfuls of documents, including 19,000 pages produced by Enterprise and 6,000 pages from Goldman Sachs, are kept under seal.

And after an Enterprise executive started muttering about defamation claims against Dunn, Van Amburg kept Dunn away from the media.

The fanatical measures used to ensure everything remains secret, marking documents and depositions confidential, filing items under seal and gagging mouths, makes it hard to figure out who's right.

But the July 3 hearing in Judge Dolan's courtroom offered a glimpse.

At issue was whether Dunn's lawyers could depose six key Enterprise shareholders and directors, including Jack Taylor and his daughter JoAnn Taylor Kindle.

On the stand, Dunn testified that the directors had been made aware of some of the problems he'd identified to senior management. There was the question of how the company depreciated rental cars on its balance sheet: Dunn and the outside financial advisors working on the IPO said the rate had to change; Jack Taylor was adamant that it remain unchanged, Dunn said.

Dunn also testified that he raised concerns to O'Connell about Jack Taylor's use of the company plane for personal business -- flying to Seattle and other points where his yacht was anchored.

But it was another question that launched Kahn.

When Van Amburg asked Dunn how much the chairman of Enterprise controlled, Kahn flew to his feet and objected, claiming the information was confidential.

Judge Dolan directed Dunn not to respond, and both sides agreed to refer to a secret exhibit.

But Kahn suggested there were substantially different reasons Dunn was sacked -- reasons that stemmed from his management style rather than his accounting acumen.

Kahn asked Dunn: Was it true that O'Connell had described him as "overbearing, dictatorial and too tyrannical"? Dunn responded: "He never gave me any specifics."

Did two separate internal auditors complain about him? Dunn said he wasn't aware of their criticisms. Did another company executive complain about his behavior? "He did not agree with my organizational structure."

And when Litow, the company general counsel, was called to testify, he said that Dunn -- an executive who was responsible for the corporation's books for more than a decade -- just plain "lacked integrity."

Exactly what sort of dishonesty, Litow didn't make clear.

But Litow said that Andy Taylor was very upset that Dunn had been rude to a job applicant.

The applicant wrote Taylor, complaining that Dunn said he "could have anybody like her -- for less money."

Judge Dolan listened patiently during the two-hour hearing.

When it was over, she didn't rule.

That would come after July 15.

She was going on vacation.

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