Race to rescue Enron auditor

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The Independent Online

KPMG is this weekend desperately trying to stitch together a global deal to take control of Arthur Andersen before the beleaguered accountancy firm collapses.

A spokesman for Andersen's Swiss business admitted that a deal to take over the whole of Andersen could be in the offing. But the accounting giant is in danger of splintering as individual country practices and business units start trying to sort out their own deal.

The spectre of imminent collapse follows a criminal indictment by the US Department of Justice over Andersen's shredding of documents linked to the bankrupt energy group Enron. Prosecutors say shredding was done in four Andersen offices, including London.

The UK arm has denied wrongdoing and maintains destruction of Enron-related files was authorised by Michael D Jones, who transferred from Andersen's Houston office to London last year.

A plan to put Andersen into Chapter 11 bankruptcy protection, to draw a line under Enron-related claims and sell the remaining business, was rejected. It is now becoming increasingly likely that the European arm of Andersen will split from the US arm. Deloitte Touche Tohmatsu and Ernst & Young were said to have been approached with preliminary offers to buy the European arm of Andersen.

But Andersen in Spain and Italy are considering going it alone, so European operations could be split on a country-by-country basis.

KPMG is still negotiating with the global business of Andersen over a merger. Last week Deloitte and Ernst & Young ruled out a global takeover.

A spokesperson for Andersen said the European arm of the company had approached Deloitte & Touche and Ernst & Young over a merger, although talks with PricewaterhouseCoopers and KPMG, could not be ruled out. Grant Thornton, the middle-ranking firm, has also thrown its hat into the ring.

Further splits emerged when the Chilean and Canadian businesses said they may split from Andersen.

Partners in Andersen's corporate advisory business are also believed to be evaluating a plan to break away from their own practice.