Andersen loses first FTSE 100 audit client since Enron collapse

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The Independent Online

Andersen, the stricken auditor, has parted company with one of its FTSE 100 clients for the first time since becoming engulfed in the collapse of US energy giant Enron.

Amvescap, the fund manager ranked 35 in the FTSE, is to shift its custom to Andersen's "big five" rival, Ernst & Young. E&Y is among predators circling Andersen's operations beyond the US office that was responsible for auditing Enron.

It was unclear last night whether Andersen had jettisoned Amvescap or vice versa. A US regulatory filing showed that Andersen was not seeking reappointment as Amvescap's independent auditor. The filing gave no reason for Andersen's apparent resignation but indicated there were no disagreements between the two companies during the two years up to the end of 2001.

Andersen and Amvescap declined to comment.

The UK business of Amvescap, best known for its Invesco brand, would represent £1.7m in audit fees and £2.7m in consulting fees. It had been with Andersen since 1994.

Andersen's other FTSE clients were tight-lipped about whether they were poised to dump the auditor.

WPP, the advertising giant, said: "Things are moving at a pace. We are keeping a fairly close watch on the situation."

BSkyB said: "We continue to monitor the situation."

Shire Pharmaceuticals and Cadbury Schweppes said they were happy with Andersen's audit work to date. Canary Wharf and British Land declined to comment.

To date, only Mayflower, the engineering group, and the media company Wireless Group had severed ties with Andersen in the UK.

Meanwhile, the exodus of Andersen clients around the world continued. Chicago Mercantile Exchange Holdings, owner of the largest US futures exchange, Waste Management Inc and the energy group Apache Corporation led the deserters in the US. The total number of US client defections so far this year is 53, with the world number-one auditor PricewaterhouseCoopers being the principal beneficiary, taking 11 clients. Like Enron, Waste Management and Apache are based in Houston, Texas.

The prospects for a clean takeover of Andersen's non-US operations by frontrunner KPMG also appeared to weaken after the troubled auditor's New Zealand office struck a deal with E&Y. Earlier this week Andersen's Russian office agreed to a merger with E&Y, while its Chinese and Hong Kong offices unveiled plans to tie up with PwC.

On Thursday, Mike Rake, KPMG's European chairman, said a break-up of Andersen among the other large auditing groups would cause chaos in the industry. Andersen played down the various splinterings, saying the proposed deal with KPMG was on track.

Separately, Nancy Temple, Andersen's lawyer, was expected yesterday to decline to testify in civil hearings about the firm's role in the Enron scandal. She had been criticised over an October memo that has been interpreted as an instruction to destroy Enron-related documents. The civil action is part of a class-action lawsuit launched by Enron shareholders.

On Wednesday, Andersen pleaded not guilty to an obstruction of justice charge in the US relating to its shredding of Enron documents.

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