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Andersen split revived

Dissident partners at the international accounting and consulting firm Andersen Worldwide have revived plans to split the organisation into separate consulting and auditing companies after a second candidate for chief executive failed to secure election.

This weekend the Andersen Worldwide board, the umbrella organisation of Arthur Andersen, the auditors, and Andersen Consulting, are closeted in crisis meetings in an attempt to resolve the impasse over the future leadership of the organisation.

In 1996, the combined entity achieved record revenues of $9.5bn (pounds 5.7bn), but for the first time the $4.9bn contribution of Andersen Consulting outstripped that of its sister organisation.

The 2,700 partners last month rejected the board's recommended candidate, Jim Wadia, head of Arthur Andersen in the UK. And last week the second candidate, George Shaheen, from Andersen Consulting in the US, failed to get the two-thirds majority required to be elected chief executive.

The rumblings of discontent stem from the continuing frustration of the partners in Andersen Consulting at what they see as "foot-dragging" by the partners of Arthur Andersen over proposed reforms of the business structure.

Sources at Arthur Andersen said that had Mr Shaheen been elected, he would have instituted a change to the internal company structure that would have seen Andersen Consulting swallow the fledgling consulting arm of Arthur Andersen, and a long-term commitment to separate the partnership revenues.

This may have eventually led to the flotation of the consulting side to allow it to raise finance independently and compete in the expanding outsourcing market, which requires large sums of capital.