Andersen Consulting calls in arbitrator
Thursday 18 December 1997
About 1,000 of the consulting business's partners meeting in San Francisco unanimously backed proposals that could lead to the two businesses that together make up the world's biggest and fastest-growing professional services firm going their separate ways.
A statement issued by Andersen Consulting yesterday cited "serious breaches of contract and irreconcilable differences" and said that it was seeking a declaration that it be allowed to go its own way. Vernon Ellis, European managing partner, pointed out that Andersen Consulting had paid "hundreds of millions of dollars" to effectively subsidise the setting up of a competitor and said that he believed it was "the best course for both parties" if the two firms were left free to develop on their own. He said that there was no claim for compensation.
Arthur Andersen, which sent Jim Wadia, its UK-based, newly-appointed global managing partner, to the meeting with a peace offering, was last night understood to be surprised by the development, since it is believed that Mr Wadia's proposal represented a substantial shift from its original position and proposed giving the unit greater autonomy.
Mr Wadia said that Arthur Andersen would approach the arbitration in "a professional manner" and abide by what was decided. But he warned other accounting firms, including those in the Big Six, that whatever happened it would continue to prosper. Earlier this week, "International Accounting Bulletin", reported that last year's revenues rose 19 per cent to $11.3bn, and it is expected that figures for the current year will continue the trend.
The call for the intervention of an arbitrator under the rules of the International Chamber of Commerce brings to a head a row that has been simmering, almost since the two business units were established in 1989. Arthur Andersen claims that much of Andersen Consulting's success has been achieved on the back of its name. But the consulting partners claim that - in addition to transferring money to their sister organisation - they have contributed greatly to the management of the combined operation. They also stress that they have invested heavily in their firm's name and would see no need to change it should the arbitrator back their call to go it alone.
However, it can be expected that over the months that the arbitration process is likely to take Arthur Andersen will defend its rights over such matters as the firm name.
The row came to a head during the summer, when Robert Grafton, the world- wide firm's chairman, had to step in as interim chief executive after the 2,700 partners failed to back either of the management's candidates for the post. It had been hoped to settle the difficulties internally by next spring, but this week's events mean that the Chicago-based firm's troubles are firmly out in the open.
Mr Ellis emphasised that the dispute was "not about money", but about the "inequity" of a situation where the two parts of the firm were increasingly in competition.
- 1 Michelle Rodriguez: Fast & Furious actor apologises after telling 'minorities' to stop taking on 'white' roles
- 2 The black and blue dress: Makers considering a white and gold version
- 3 This is what it's like to be dead, according to a guy who died for a bit
- 4 PornHub turns masturbation into energy in bid to save the planet
- 5 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
Stephen Hawking's wife Jane Wilde on their marriage breakdown: 'The family were left behind'
Boris Nemtsov shot dead: Putin critic may have been murdered by Islamic extremists, says president-led committee
British are sexually uptight, dirty and drink too much – according to Spanish book
PornHub turns masturbation into energy in bid to save the planet
White and gold or blue and black – what colour is the dress? An eyewitness gives a definitive answer
New theory could prove how life began and disprove God
This is what it's like to be dead, according to a guy who died for a bit
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
Russia's roadmap for annexing eastern Ukraine 'leaked from Vladimir Putin's office'
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...