Thursday, March 28, 2002

Andersen searches for boss, buyers for pieces




The Associated Press

        CHICAGO — Top partners for Arthur Andersen LLP, desperate to prevent the company from collapsing, pressed efforts Wednesday to find a new leader and negotiate the possible sale of Andersen's nonaudit businesses.

        A day after Joseph Berardino quit as chief executive of Andersen Worldwide — the legal entity that includes U.S. operation Arthur Andersen — the troubled firm remained wracked by uncertainty amid dwindling hope for its survival.

        A successor to Mr. Berardino won't be chosen until next week at the earliest, spokesman Charlie Leonard said. Andersen Worldwide's governance requires that the 18-member board of partners meet to take such an action, and Mr. Leonard said no meeting is scheduled until Tuesday in London.

        Many partners see former Federal Reserve Chairman Paul Volcker as Andersen's best chance to stay alive. But Mr. Volcker's rescue plan, which calls for him to install and head an independent governing board, appears to be on hold unless the government abandons a criminal indictment of Andersen in the destruction of documents related to bankrupt audit client Enron Corp.

        But that is unlikely.

        “It doesn't change anything,” Justice Department spokesman Bryan Sierra said. Neither Mr. Berardino's announced resignation nor Mr. Volcker's proposal changes the government's plans to prepare for trial May 6, he said.

        The Chicago firm's 1,700 U.S. partners, who don't have a direct say in a successor, huddled in conference rooms at Andersen offices across the country Wednesday to discuss strategy and the possible sales of various nonauditing units to its rivals. By late afternoon, no major decisions had been made or deals consummated, several said, and the mood remained as tense as before Mr. Berardino's resignation.

        “The organization is incredibly nervous about its future,” New York-based partner Jack Gelman said.

        Deloitte Touche Tohmatsu and KPMG are among the suitors for some of Andersen's U.S. businesses. Andersen's tax partners met in Chicago to discuss a Deloitte term sheet to acquire its tax business, according to a partner who spoke on condition of anonymity.

        Rival firms also have been courting Andersen's partners, who can't leave without significant complications unless the partners vote to eliminate their noncompete clause.

        Asked about talks Wednesday, Deloitte spokesman Matthew Batters issued a statement saying the accounting firm will work with regulatory agencies “for an orderly transition of clients and people if Andersen cannot continue as a free-standing firm.”

        All previous attempts to broker sales of Andersen units have faltered, largely over the issue of Andersen's huge liability from Enron lawsuits.

        “We all would like to see Andersen survive this,” said Doug DeRito, a tax partner in the Atlanta office. “But I think we need to be responsible and consider other viable options to protect the jobs of 28,000 employees in the U.S.”

        The flood of Andersen client losses continued Wednesday. Sysco Corp., a $22 billion food-service marketer and distributor, was the biggest new defection. Andersen has now lost at least 85 public audit clients this year — a majority of them this month.

       



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