Friday, April 05, 2002

Andersen breaks up U.S. arm

Partners to join a rival firm

By Dave Carpenter
The Associated Press

        CHICAGO — Signaling the breakup of its U.S. operations, Arthur Andersen LLP Thursday said a significant number of its U.S. tax partners and professionals will join rival Deloitte & Touche.

        Terms were not disclosed.

        Andersen's U.S. operations are in jeopardy as a result of the Enron Corp. scandal. The firm hopes to survive as a slimmed-down company focused on auditing.

        “This transaction is fully consistent with our commitment to move quickly on the Andersen reforms initiated by Mr. Volcker,” said Larry Gorrell, managing partner of Arthur Andersen, the U.S. arm of Andersen Worldwide.

        Former Federal Reserve Chairman Paul Volcker is head of an oversight board attempting to reform Andersen and keep it alive as an independent firm.

        Andersen said it had signed a memorandum of understanding with Deloitte that serves as an agreement in principle. It said details remain to be worked out, but it anticipates a closing date of as soon as April 30.

        The announcement followed weeks of negotiations between Andersen and other members of the Big Five accounting firms over its assets. The company has been trying to sell off some of its units to raise money, but previous efforts snagged over the issue of liability for the many lawsuits Andersen faces from its role as chief auditor for bankrupt energy trader Enron.

        A U.S. federal grand jury indicted Andersen's U.S. arm March 14 on a charge of obstruction of justice for allegedly destroying documents related to its audit work for Enron.

        Earlier Thursday, Andersen Worldwide named the chairman of its Board of Partners, Aldo Cardoso, acting chief executive, with the key task of trying to manage an orderly dismemberment of non-U.S. operations.


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