Carving up Andersen

As the former giant breaks up, its British accountancy arm is to be sold off to KPMG
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The Independent Online

The British arm of Andersen is expected to complete its deal to be sold off to KPMG this week as the once-mighty accountancy firm shatters in the wake of the Enron scandal.

Despite an expected settlement deal between Andersen and the US Justice Department, which has accused it of obstructing justice by shredding documents related to Enron, a global deal to sell to KMPG collapsed last week.

Different practices within the Andersen empire are going their separate ways. PricewaterhouseCoopers has picked up the Hong Kong, China and Middle East practices, Ernst & Young has secured Russia, Australia, New Zealand and Singapore, Deloitte & Touche Tohmatsu has won over the Spanish and Latin American operation and has persuaded the US tax practice to defect to it, while KPMG is getting Germany, France, Japan, Thailand and Switzerland, and is still hoping to win the rest of the US business, Canada and the UK.

A final deal in the US and UK depends on whether there is any liability as a result of Enron documents being shredded in Andersen offices in Houston, Chicago, Portland Oregon and London. The complex scenario has been made worse by an order won in a Houston court by insurance companies with claims against Andersen stopping the firm selling any of its assets.

Some 120 US companies have said they are dropping Andersen as auditors, with Ernst & Young being the largest beneficiary, winning over 28 of them. The first statement made by Aldo Cardoso, the Swiss accountant, who was elected interim chief executive of Andersen after the resignation of Joe Berardino was that he wanted an orderly break-up of the accounting firm. He may reflect it could have been different if Andersen had listened to Carl E Bass, the Andersen auditor who queried what the firm was allowing Enron to get away with in 1999. Enron complained to Mr Bass's boss, David Duncan, who dropped him from the team.