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Wednesday, 27 March, 2002, 06:28 GMT
Andersen chief steps down
Joseph Berardino
Joseph Berardino: Sought "to save Andersen"
The chief of Andersen, who has battled to defend his firm's role in the Enron scandal, has resigned.

Joseph Berardino, who had been with Andersen for 30 years, said he was leaving in bid to prevent the firm's collapse.

The fact is that the improper shredding of documents took place on my watch

Joseph Berardino
Departing Andersen chief
Andersen faces criminal charges over allegations of destroying papers relating to the collapse of power giant Enron, which filed for bankruptcy four months ago in the biggest ever US corporate failure.

"I felt I had to take this step today to put an exclamation point behind the voices of our people... to say we are serious and we are a serious firm that deserves to continue here in the United States," Mr Berardino told CNN's Moneyline show.

Professor Itzhak Sharav from Columbia University told the BBC's World Business Report he believes Mr Berardino's resignation heralds the collapse of Andersen.

"Clients who have been quitting, leaving in droves will continue to do so, in fact they will probably panic and think that they should do it as quickly as possible," he said.

Volcker deal

Mr Berardino's decision comes four days after Paul Volcker, who Andersen appointed last month to come up with suggestions for restoring the firm's reputation, urged a shake-up of senior personnel.

Mr Volcker, former chairman of the Federal Reserve, the US central bank, proposed a fresh seven-member board to run Andersen.

He urged the US Justice Department in return to drop charges against Andersen - although that is looking increasingly unlikely after new allegations about Andersen involvement in inflated earnings reports at former client Waste Management.

The firm's 1,700 partners, attempting to stem an exodus of clients in the wake of the Enron scandal, have also urged Mr Berardino to step down.

Mr Berardino, whose term had been due to end in August 2004, said he would leave the firm once a successor was appointed.

"While my nature is to keep fighting to protect our people and our clients, the fact is that the improper shredding of documents took place on my watch - and I believe it is now in the best interests of the firm for me to step down," he wrote in an e-mail to staff.

Fat Four?

In the meantime, the break-up of Andersen's global operations is continuing, with most of its Asian units continuing to talk to KPMG - another of the Big Five auditors - about a merger.

An Andersen employee protests along with his child with a sign saying
Andersen employees are protesting at possible closure
Five - in China, Hong Kong, Russia, New Zealand and Australia - have decided to turn to other Big Five members, but the rest could still side with KPMG.

And the consolidation could spell trouble for accounting in general, according to a member of the only international accounting standards organisation.

The move from Big Five to Fat Four - KPMG, Deloitte Touch Tohmatsu, PriceWaterhouseCoopers and Ernst & Young - is creating an "oligopoly", Gilbert Gelard, one of the International Accounting Standards Board's 14 members, told AFP newswire.

"I do not know how international accounting will be able to function with only four major auditors," he warned.

Lifelong employee

Mr Berardino's resignation comes 14 months after he was appointed chief executive, after three years on the board of the firm's global overseeing body, Andersen Worldwide.

He was appointed a partner in 1982 and is a member of US organisations including the Conference Board, an esteemed New York-based business group.

He is also an adviser to the British American Business Council, and to the mayor of Shanghai.

'Serious errors'

Within a year of his appointment, Mr Berardino was testifying before Congress over Andersen's role in Enron's collapse.

"If my firm has made errors of judgement, we will acknowledge them," he told the House of Representatives committee on financial services.

"We will make changes needed to restore confidence."

A month later, he admitted to reporters that Andersen staff "made serious errors in judgement" in destroying documents.

"It was wrong. There's no other word for it," he added.

But has insisted that Andersen had not been involved in creating the web of partnerships implicated in Enron's collapse.

"We did not help to establish. We reviewed the accounting that others developed," he said.

Silver lining

Earlier on Tuesday, Alan Greenspan, the Fed's current chairman, said that business leaders had improved their regimes since the Enron scandal broke.

"Corporate reputation is fortunately re-emerging out of the ashes of the Enron debacle as a significant economic value," Mr Greenspan said in a speech at New York University's Stern School of Business.

"Corporate governance has doubtless already measurably improved as a result of this greater market discipline in the wake of recent events," he said.

Professor Itzhak Sharav, Columbia University
"I think this heralds the total collapse of Andersen"
The BBC's Patrick O'Connell
"Andersen faces criminal charges"
Damian Wilde, Accountancy Age Magazine
"Andersen needs him (Mr Volcker) very much more than he needs Andersen"
See also:

19 Mar 02 | Business
Questions over Andersen break-up
20 Mar 02 | Business
Andersen pleads not guilty
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