BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in:  Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Friday, 29 March, 2002, 00:08 GMT
Andersen backs rescue plan
Joseph Berardino
Andersen has yet to find a successor to 30-year veteran Berardino
The chief executive's chair at Andersen, the accounting firm deeply implicated in the Enron scandal, remains empty.

A five-hour meeting of its 1,700 US partners using video conference calling broke up on Thursday without finding a successor to Joseph Berardino, who this week stepped down to give the company a clean start.

More meetings are scheduled for next week.

But in the meantime the partners are rallying around a rescue plan drawn up by former Federal Reserve chairman Paul Volcker.

"We are committed to building the audit firm of the future under the leadership and recommendation of Mr Volcker," said Andersen managing partner Larry Gorrell in a statement.

Away with consulting

If the plan goes ahead, thousands of jobs would be lost, and the company's non-audit businesses - tax and business consulting and corporate finance - would be sold off, spun off or merged into other companies.

Lou Salvatore
Salvatore: a favourite for the top job?
That would leave the accounting side free to bid for business without the taint of having Andersen staff also touting for lucrative consulting deals.

That taint is what many observers believe brought Andersen down in the first place.

Its audit business with disgraced energy firm Enron was much smaller than the consulting side, and US lawmakers have alleged Andersen deliberately took its eye off the ball at Enron to make sure the consulting jobs kept coming.

On trial

Still, the US side of Andersen still has a very difficult course to navigate if it is to avoid collapse.

The rest of its worldwide operations are being bought up by its rivals. Australian partners have defected to Ernst & Young, while much of the rest of the firm could end up with KPMG.

But as well as billion-dollar lawsuits from disgruntled clients, the US arm faces possible criminal charges for obstructing justice, and if the indictment proceeds its chances of independent survival look slim at best.

The charges are based on the suggestion that Andersen staff shredded documents relating to Enron's use of off-balance sheet offshore companies to hide its losses after federal regulators had begun their investigation.

'In Enron's pocket'

The charges were given fresh impetus on Thursday with a report in Business Week magazine, which alleged that the Houston-based team auditing Enron wrote false memos claiming Andersen's internal review board had sanctioned their work on the energy company.

The magazine said internal Andersen documents showed the Professional Standards Group, as the internal review team were called, came down heavily against the practices the Enron team were indulging in.

But the team leader, David Duncan - already blamed by the company for much of the trouble Andersen is in - allegedly had what the magazine called a "chief sceptic", Carl Bass, removed from the PSG team - at the behest of Enron executives.

Names to watch out for?

If the company does survive, several names are in the frame to take over from Mr Berardino.

Mr Volcker is one - although an external candidate is thought unlikely, according to Alex Miller, senior reporter at Accountancy Age in London.

The favourit, Mr Miller told BBC News Online, "appears to be Lou Salvatore".

Mr Salvatore stepped in as global managing partner for five months from August 2000 to January 2001 after the accountancy firm's bitter divorce from its consultancy business. He is currently a partner in the US.

Another possible candidate is Mr Gorrell, a Chicago-based partner who has been appointed to head a temporary board to run the US operations.

And Reuters news agency said on Thursday that sources close to Andersen were tipping Aldo Cardoso, chairman of Andersen Worldwide and head of operations in France.

See also:

27 Mar 02 | Business
Andersen chief steps down
19 Mar 02 | Business
Questions over Andersen break-up
20 Mar 02 | Business
Andersen pleads not guilty
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories