FOR IMMEDIATE RELEASE                             2001-62

 Arthur Andersen LLP Agrees to Settlement Resulting in First
 Antifraud Injunction in More Than 20 Years and Largest-Ever
 Civil Penalty -- of $7 Million -- in SEC Enforcement Action
             Against a Big Five Accounting Firm
                              
    SEC Finds That Andersen's Audit Reports on Financial
 Statements for Waste Management, Inc. Were Materially False
    and Misleading and That Andersen Engaged in Improper
                    Professional Conduct
                              
 Three Andersen Partners Also Consent to Entry of Antifraud
    Injunctions and Monetary Penalties and Settle Related
  Administrative Proceedings; a Fourth Andersen Partner, a
     Regional Practice Director, Settles Administrative
        Proceedings for Improper Professional Conduct
                              
                              
     Washington, DC, June 19, 2001 -- The Securities and
Exchange Commission today brought settled enforcement
actions against Arthur Andersen LLP and four of its current
or former partners in connection with Andersen's audits of
the annual financial statements of Waste Management, Inc.
for the years 1992 through 1996.  Those financial
statements, on which Andersen issued unqualified or "clean"
opinions, overstated Waste Management's pre-tax income by
more than $1 billion.  As alleged in the Commission's
complaint and found in a related Commission order, Andersen
knowingly or recklessly issued materially false and
misleading audit reports on Waste Management's annual
financial statements.  The audit reports falsely stated that
the financial statements were presented fairly, in all
material respects, in conformity with generally accepted
accounting principles ("GAAP") and that Andersen's audits
were conducted in accordance with generally accepted
auditing standards ("GAAS").
     
     Andersen settled both a civil injunctive action
charging violations of antifraud provisions of the federal
securities laws, and related administrative proceedings
finding that the firm had engaged in improper professional
conduct.  Without admitting or denying the allegations or
findings, Andersen agreed to the first antifraud injunction
in more than 20 years and largest-ever civil penalty -- of
$7 million -- in an SEC enforcement action against a Big
Five accounting firm.  Andersen further agreed to be
censured under the SEC's rules of practice.
     
     Three Andersen partners also settled both the civil
injunctive action, which also charges them with violations
of antifraud provisions of the federal securities laws, and
related administrative proceedings.  Without admitting or
denying the allegations, each agreed to the entry of an
antifraud injunction to the payment of a civil penalty and
to a bar from appearing or practicing before the Commission
as an accountant -- one with the right to request
reinstatement after five years and two with the right to
request reinstatement after three years.
     
     
     The fourth Andersen partner, a regional practice
director, settled administrative proceedings finding that he
had engaged in improper professional conduct.  Without
admitting or denying the findings, he also agreed to a bar
from appearing or practicing before the Commission as an
accountant, with the right to request reinstatement after
one year.
     
     According to Richard H. Walker, the SEC's Director of
Enforcement, "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.  Given the positions held by these
partners and the duration and gravity of the misconduct, the
firm itself must be held responsible for the false and
misleading audit reports issued in its name."  Mr. Walker
added:  "Accountants play a critical role in providing
access to our capital markets.  We will not shy away from
pursuing accountants and accounting firms when they fail to
live up to their responsibilities to ensure the integrity of
financial reporting process."
     
     Following is a summary of the sanctions:

  *  Arthur Andersen LLP consented (1) to the entry of a
     permanent injunction enjoining it from violating section
     10(b) of the Securities Exchange Act of 1934 ("Exchange
     Act") and rule 10b-5 thereunder; (2) to pay a civil money
     penalty in the amount of $7 million; and (3) in related
     administrative proceedings, to a censure pursuant to rule
     102(e) of the Commission's rules of practice, based upon the
     Commission's finding that the firm had engaged in improper
     professional conduct and based also upon the issuance of the
     permanent injunction;

  *  Robert E. Allgyer, now retired and then the partner
     responsible for the Waste Management engagement, consented
     (1) to the entry of a permanent injunction enjoining him
     from violating section 10(b) of the Exchange Act and rule
     10b-5 thereunder and section 17(a) of the Securities Act of
     1933 ("Securities Act"); (2) to pay a civil money penalty in
     the amount $50,000; and (3) in related administrative
     proceedings pursuant to rule 102(e), to the entry of an
     order denying him the privilege of appearing or practicing
     before the Commission as an accountant, with the right to
     request his reinstatement after five (5) years;

  *  Edward G. Maier, currently a partner and then the risk
     management partner for Andersen's Chicago office and the
     concurring partner on the Waste Management engagement,
     consented (1) to the entry of a permanent injunction
     enjoining him from violating section 10(b) of the Exchange
     Act and rule 10b-5 thereunder and section 17(a) of the
     Securities Act; (2) to pay a civil money penalty in the
     amount $40,000; and (3) in related administrative
     proceedings pursuant to rule 102(e), to the entry of an
     order denying him the privilege of appearing or practicing
     before the Commission as an accountant, with the right to
     request his reinstatement after three (3) years;

  *  Walter Cercavschi, currently a partner and then a
     partner on the Waste Management engagement, consented (1) to
     the entry of a permanent injunction enjoining him from
     violating section 10(b) of the Exchange Act and rule 10b-5
     thereunder and section 17(a) of the Securities Act; (2) to
     pay a civil money penalty in the amount $30,000; and (3) in
     related administrative proceedings pursuant to rule 102(e),
     to the entry of an order denying him the privilege of
     appearing or practicing before the Commission as an
     accountant, with the right to request his reinstatement
     after three (3) years;

  *  Robert G. Kutsenda, currently a partner and then the
     Central Region Audit Practice Director responsible for
     Andersen's Chicago, Kansas City, Indianapolis, and Omaha
     offices ("Practice Director"), consented in administrative
     proceedings pursuant to rule 102(e), to the entry of an
     order, based on the Commission's finding that he engaged in
     improper professional conduct, denying him the privilege of
     appearing or practicing before the Commission as an
     accountant, with the right to request reinstatement after
     one (1) year.

     As alleged in the Commission's complaint or found in
its related administrative order:  In each of the years 1992
through 1996, the Andersen engagement team identified a
variety of improper accounting practices that caused Waste
Management's operating and income tax expenses to be
understated and its net income to be overstated.  While
Andersen quantified some of these misstatements, other known
and likely misstatements were not quantified and estimated,
as required by GAAS.   In connection with the audit of Waste
Management's 1993 financial statements, Andersen proposed a
series of "Action Steps" to change the company's improper
accounting practices only in future periods and to write off
its prior misstatements over a five- to seven-year period,
rather than require immediate correction in accordance with
GAAP.  Andersen also allowed Waste Management to, in
Andersen's own words, "bury" certain charges by improperly
netting them against unrelated, one-time gains.  Andersen
told Waste Management that its use of netting was an "area
of SEC exposure" but nonetheless allowed it to occur.
Ultimately, when the misstatements were revealed, Waste
Management announced the largest restatement in American
corporate history.  In issuing an unqualified audit report
on the restated financial statements, Andersen acknowledged
that the financial statements it had originally audited were
materially misstated.
     
     As further alleged or found by the Commission:
     
                     Andersen
     
  *  Andersen knowingly or recklessly issued false and
     misleading unqualified audit reports on Waste Management's
     annual financial statements for the years 1993 through 1996.
     The audit reports stated that the Company's financial
     statements were presented fairly, in all material respects,
     in conformity with GAAP and that Andersen's audits were
     conducted in accordance with GAAS.  These representations
     were materially false and misleading.

  *  In one or more audits during the period 1993 through
     1996, Andersen, through Allgyer, Maier and Cercavschi,
     identified and documented numerous accounting issues giving
     rise to misstatements and likely misstatements, and brought
     certain of the issues to the attention of Andersen's
     Practice Director, the firm's Managing Partner and the Audit
     Division Head for the firm's Chicago office ("Audit Division
     Head").  The engagement team also consulted with and relied
     upon Andersen's waste industry expert in its Accounting
     Principles Group (a unit within Andersen available for
     consultation on significant accounting issues) concerning
     certain of the Company's improper accounting practices
     discussed herein.

  *  With respect to many of the non-GAAP accounting
     practices that it identified, Andersen failed to quantify
     and estimate all known and likely misstatements resulting
     from the accounting issues identified by the engagement
     team.  During the years in question, Andersen quantified
     only certain of the misstatements.  For example, in its 1993
     audit, Andersen quantified current and prior-period
     misstatements of $128 million, the correction of which would
     have reduced net income before special items by 12%.  The
     engagement team also identified, but did not quantify or
     estimate, accounting practices that gave rise to other known
     and likely misstatements.  Allgyer and Maier consulted with
     the Practice Director and the Audit Division Head and
     informed them of the quantified misstatements and
     "continuing audit issues," and Allgyer consulted with the
     Firm's Managing Partner and provided him the same
     information.  The partners determined that the misstatements
     were not material and that Andersen could issue an
     unqualified audit report on the Company's 1993 financial
     statements.

  *  In connection with the 1993 audit, following the
     consultations noted above, and prior to the Company's
     announcement of its 1993 earnings, Allgyer presented the
     Action Steps to the Company's Chief Executive Officer (later
     signed and initialed by the Company's Chief Financial
     Officer and Chief Accounting Officer).  According to an
     internal memorandum that Allgyer distributed, the Action
     Steps were the "minimum changes we have concluded are
     necessary for [Waste Management] to implement immediately"
     and concluded that the Company's compliance with the "must
     do" items [in the Action Steps] "brings the Company to a
     minimum acceptable level of accounting . . . ."  The Action
     Steps also evidenced the fact that Andersen had identified
     the non-GAAP accounting practices that gave rise to numerous
     misstatements in the Company's 1993 through 1996 financial
     statements.

  *  In 1994, the Company continued to engage in accounting
     practices that gave rise to the quantified misstatements and
     the other known and likely misstatements.  As in 1993, the
     Practice Director, the Firm's Managing Partner and the Audit
     Division Head were consulted, and they again concurred in
     the issuance of an unqualified audit report on the Company's
     financial statements.

  *  Andersen monitored the Company's compliance or lack of
     compliance with the Action Steps.  In 1995, in many
     instances, the Company did not implement the Action Steps
     and continued to utilize accounting practices that did not
     conform with GAAP.  In its 1995 financial statements, the
     Company used a $160 million gain that it realized on the
     exchange of its interest in an entity known as ServiceMaster
     to offset $160 million in unrelated operating expenses and
     misstatements that, in most instances, had been identified
     as misstatements in 1994 and earlier.  In its income
     statement, the Company offset the misstatements and expenses
     against the gain.  The amount netted represented 10% of 1995
     pre-tax income before special charges.  The Company made no
     disclosure of the netting.

  *  After reaching a preliminary determination that the
     amounts being netted were not material to the financial
     statements taken as a whole, two partners on the engagement
     consulted with the Practice Director about the netting and
     whether Andersen would be required to qualify or withhold
     its audit report if the Company netted the ServiceMaster
     gain and did not disclose the netting.  (The Practice
     Director understood that only prior-period adjustments would
     be netted.)  He concluded that, although the netting did not
     conform with GAAP and the netted items would not be
     disclosed, Andersen did not need to qualify or withhold its
     audit report.  He reasoned that the netting and the non-
     disclosure of the misstatements and the unrelated gain were
     not material to the Company's 1995 financial statements
     taken as a whole.  In fact, these items were material.
     Andersen's 1995 unqualified audit report was materially
     false and misleading.

  *  Several months after the completion of the 1995 audit
     and the Company's filing of its 1995 Form 10-K with the
     Commission, Andersen prepared a memorandum articulating its
     disagreement with the Company's use of netting and the lack
     of disclosure.  The memorandum discussed the ServiceMaster
     transaction of 1995 and gains from other transactions in
     1996 that were netted without disclosure.  According to the
     memorandum, Andersen recognized that

          [t]he Company has been sensitive to not use
          special charges [to eliminate balance sheet errors
          and misstatements that had accumulated in prior
          years] and instead has used `other gains' to bury
          charges for balance sheet clean ups.  [Emphasis in
          original]..
          
               We disagree with management's netting of the
          gains and charges and the lack of disclosures.  We
          have communicated strongly to WMX management that
          this is an area of SEC exposure.  We will continue
          to monitor this trend, and assess in all cases the
          impact of non-disclosure in terms of materiality
          to the overall financial statement presentation
          and effect on current year earnings.

  *  Despite its concerns about the Company's use of
     netting, Andersen did not withdraw or modify its 1995 audit
     report or take steps to prevent the Company from continuing
     to use netting in 1996 to eliminate current-period expenses
     and prior-period misstatements from its balance sheet.  The
     Company also continued to employ many of the improper
     accounting practices to inflate income.

  *  During the 1996 audit, Andersen quantified
     misstatements in the Company's financial statements, which
     equaled 7.2% of pre-tax income from continuing operations
     before special charges.  The Company also netted and
     misclassified gains and profits of approximately $85.1
     million on the sales of two subsidiaries, which Andersen
     also identified as improper, and which, if corrected in
     1996, would have reduced pre-tax income from continuing
     operations before special charges by an additional 5.9%.

  *  As noted in the order as to Andersen, this conduct took
     place against the following background:

       -  Andersen has served as Waste Management's auditors
          since before Waste Management became a public company in
          1971.

       -  Andersen regarded Waste Management as a "crown jewel"
          client.

       -  Until 1997, every chief financial officer ("CFO") and
          chief accounting officer ("CAO") in Waste Management's
          history as a public company had previously worked as an
          auditor at Andersen.

       -  During the 1990s, approximately 14 former Andersen
          employees worked for Waste Management, most often in key
          financial and accounting positions.

       -  Andersen regarded Allgyer as one of its top "client
          service" partners.  Andersen selected Allgyer to become the
          Waste Management engagement partner because, among other
          things, Allgyer had demonstrated a "devotion to client
          service" and had a "personal style that  . . . fit well with
          the Waste Management officers."  During this time (and
          continuing throughout his tenure as engagement partner for
          Waste Management), Allgyer held the title of "Partner in
          Charge of Client Service" for Andersen's Chicago office and
          served as "marketing director."  In this position, Allgyer
          coordinated the marketing efforts of Andersen's entire
          Chicago office including, among other things, cross-selling
          non-attest services to audit clients.

       -  Shortly after Allgyer's appointment as engagement
          partner, Waste Management capped Andersen's corporate audit
          fees at the prior year's level but allowed the Firm to earn
          additional fees for "special work."

       -  As reported to the audit committee, between 1991 and
          1997, Andersen billed Waste Management corporate
          headquarters approximately $7.5 million in audit fees.  Over
          this seven-year period, while Andersen's corporate audit
          fees remained capped, Andersen also billed Waste Management
          corporate headquarters $11.8 million in other fees.

       -  A related entity, Andersen Consulting, also billed
          Waste Management corporate headquarters approximately $6
          million in additional non-audit fees.  Of the $6 million in
          Andersen Consulting fees, $3.7 million related to a
          Strategic Review that analyzed the overall business
          structure of the Company and ultimately made recommendations
          on implementing a new operating model designed to "increase
          shareholder value."  Allgyer was a member of the Steering
          Committee that oversaw the Strategic Review, and Andersen
          Consulting billed his time for these services to the
          Company.

       -  In setting Allgyer's compensation, Andersen took into
          account, among other things, the Firm's billings to the
          Company for audit and non-audit services.

                           Allgyer
                              
  *  Allgyer is the only defendant charged in connection
     with Andersen's audit of Waste Management's 1992 financial
     statements.  The Complaint alleges that Allgyer knew or was
     reckless in not knowing that the Andersen's audit report on
     the Company's 1992 financial statements was materially false
     and misleading because in addition to quantified
     misstatements totaling $93.5 million that, if corrected,
     would have reduced the Company's net income before
     accounting changes by 7.4%, he knew or was reckless in not
     knowing of additional known and likely misstatements that
     had not been quantified and estimated.  Allgyer further knew
     that the Company had netted, without disclosure, $111
     million of current-period expenses and prior-period
     misstatements against a portion of a one-time gain from an
     unrelated initial public offering of securities, which had
     the effect of understating Waste Management's 1992 operating
     expenses and overstating the Company's income from
     operations.
                            
  *  The Commission's complaint further alleges that Allgyer
     engaged in similar conduct in connection with the 1993
     through 1996 audits:  Allgyer knew or was reckless in not
     knowing that Andersen's unqualified audit report for each of
     the years 1993 through 1996 was materially false and
     misleading.
                            
                          Maier
                            
  *  The Commission's complaint alleges that, for each of
     the years 1993 through 1996, Maier knew of the quantified
     misstatements and of accounting practices that gave rise to
     additional known and likely misstatements that were not
     quantified and estimated and approved the issuance of an
     unqualified audit report.  He knew or was reckless in not
     knowing that Andersen's unqualified audit report for each of
     the years 1993 through 1996 was materially false and
     misleading.

                       Cercavschi
                            
  *  The Commission's complaint alleges that, for each of
     the years 1994 through 1996, Cercavschi knew of the
     quantified misstatements and of accounting practices that
     gave rise to additional known and likely misstatements that
     were not quantified and estimated and approved the issuance
     of an unqualified audit report.  He knew or was reckless in
     not knowing that Andersen's unqualified audit report for
     each of the years 1994 through 1996 was materially false and
     misleading.

                        Kutsenda
                            
  *  The Commission's order as to Kutsenda finds that,
     during the 1995 audit, when Kutsenda was informed of the non-
     GAAP netting of a $160 million one-time gain against
     unrelated expenses and prior-period misstatements and that
     the amount represented 10% of the Company's 1995 pre-tax
     income, he knew or should have known that the Company's use
     of netting warranted heightened scrutiny.  Although not part
     of the engagement team, when he was consulted by two of the
     engagement partners, Kutsenda was required under GAAS to
     exercise due professional care so that an unqualified audit
     report was not issued on financial statements that were
     materially misstated.  The order further finds that Kutsenda
     wrongly concluded that Andersen was not required to withhold
     or qualify its audit report and that in reaching this
     result, he engaged in highly unreasonable conduct that
     resulted in a violation of applicable professional
     standards.  Based on these findings, the Commission found
     that Kutsenda engaged in improper professional conduct
     within the meaning of rule 102(e)(1)(ii) of the Commission's
     rules of practice.

                   *   *   *

     The Commission's investigation is continuing as to others.
                              
     For further information, contact:
          Richard Walker (202) 942-4500
          Stephen Cutler (202) 942-4540
          Thomas Newkirk (202) 942-4550
          James Coffman (202) 942-4551