By Annys Shin
Washington Post Staff Writer
Thursday, May 19, 2005
Housing finance company Fannie Mae yesterday said it hired nine new executives to oversee its finances and accounting practices, part of an ongoing management shake-up that followed last year's discovery of major accounting violations.
While several of the positions are new, four of the hires replace executives who oversaw Fannie's accounting at a time when, according to federal regulators, top executives flouted accounting rules to overstate the company's earnings for some years.
All of the officials being replaced were at the vice president level or above. They remain on the Fannie Mae payroll for a year in advisory positions.
The company, which is still reviewing its financial records for the past several years, estimated it may have to restate as much as $12 billion in previously reported earnings.
"This is the first phase of implementing a very significant reorganization, which the Board has approved. Reorganizing and strengthening our finance area is a top priority as we progress through the review, re-audit and restatement process," board member H. Patrick Swygert said in a press release.
"Strengthening the Controller's Office is another link in the chain. We are rebuilding Fannie Mae one link at a time," interim chief executive Daniel H. Mudd said in the release.
The federal Office of Federal Housing Enterprise Oversight demanded that Fannie review its finance department, among other measures, after discovering that Fannie employees had falsified signatures on accounting ledgers. The false signatures helped the company hit earnings targets in 1998, which allowed executives to earn $27 million in bonuses.
Fannie chairman and chief executive Franklin D. Raines was forced to leave the company in December, along with Vice Chairman and Chief Financial Officer J. Timothy Howard.
The company had previously announced the appointment of David Hisey as senior vice president and controller in a January filing with the Securities and Exchange Commission. Hisey replaced Leanne G. Spencer, who moved into an advisory role, said company spokeswoman Janis Smith.
Nicholas Radesca, a former director of external reporting for Del Monte Foods Co., has been working at Fannie since March as vice president for financial reporting. He replaced Janet L. Pennewell, who stepped down in January but remains an adviser, Smith said.
R. Scott Blackley, a vice president for accounting policy and assistant comptroller with America Online Inc., will join Fannie Mae next month, taking the place of Jonathan Boyles as senior vice president for accounting policy, Smith said. Blackley is a former partner with KPMG LLP and an expert on derivatives -- a type of financial instrument Fannie uses to protect the value of its investments from interest rate changes. OFHEO concluded that Fannie executives didn't properly account for losses from derivatives.
Six of the nine executives who are now in charge of overseeing Fannie's bookkeeping are certified public accountants.
The other new executives include: Mary B. Doyle, a former Fannie director who is now senior vice president of financial controls and systems; Gregory H. Kozich, a former lead partner at PricewaterhouseCoopers LLP, now a senior vice president for accounting; Paul A. Noring, another PricewaterhouseCoopers alum and now senior vice president of finance; James Kelly Ardrey Jr., former controller of SunTrust, now vice president for assets accounting; Patricia Black, a former senior manager in the financial services consulting group at BearingPoint Inc., now vice president of financial controls; Nigel D. Brazier, former senior vice president for business development with Select Portfolio Servicing Inc., now vice president and business unit controller; and James W. Horne, a senior manager in the financial services consulting group at BearingPoint, now Fannie's vice president for accounting systems.