Drug giant drops auditor Andersen

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Harvard Business School raises a laugh

Andersen, the auditor at the centre of the Enron scandal, has been dumped by one of its largest clients, the US drugs giant Merck.

It has been replaced by PricewaterhouseCoopers, ending a relationship that stretches back to 1971.

Though Merck said Andersen had given excellent service, it added that after "careful consideration" it was changing auditor.

Andersen has come under fire since it emerged that accountants at its Houston office shredded documents relating to the bankrupt energy group Enron, which it audited.

In the US it has already lost one large client, SunTrust Banks, but the defection of Merck will be seen as a particularly bitter blow.

In the UK, MyTravel Group came under pressure from its shareholders to disentangle its relationship with Andersen, and Cadbury Schweppes and Amvescap have both indicated that they will review their association with the auditing firm.