Andersen to Name Interim CEO
Wed Mar 27, 4:14 PM ET
By Greg Cresci
NEW YORK (Reuters) - Embattled accounting giant
Andersen is set to name an interim chief executive for
world operations as early as Thursday, sources close to
the firm told Reuters on Wednesday.
Separately, an internal memo
obtained by Reuters indicates the
firm's U.S. arm, Arthur Andersen
LLP, recently appointed a new
leader, though partners still must
ratify his position.
It was not immediately clear who
would replace Andersen CEO Joseph
Berardino, who resigned on Tuesday
amid fallout from the firm's role in
the Enron Corp. scandal.
"As I understand it, there will be a
meeting of our board of partners,
which is the senior administrative
body of our worldwide partnership,
in London in a few days to talk about
succession plans," an Andersen
partner in New York, who spoke on
condition of anonymity, told
Reuters.
Andersen is reeling from its role as auditor of Enron,
which filed for the largest ever U.S. bankruptcy in
December after shocking revelations about its
accounting methods.
The firm now faces an obstruction of justice indictment
brought by the U.S. Department of Justice, billion-dollar
lawsuits from angry Enron investors
and an exodus of prestigious clients.
Former Federal Reserve ) Chairman
Paul Volcker, who was tapped in February to overhaul
Andersen, last week proposed leading a new board that
would take control of the firm. A spokeswoman for
Volcker declined to comment on the alleged meeting in
London to pick a new world CEO for Andersen.
Sources close to the firm in London said managing
partners were to meet in that city on Thursday, with
executives flying in from Asia and the United States.
The purpose of the meeting is to select an interim CEO
to replace Berardino, they said.
Andersen Worldwide's U.S.-based spokesman, Charlie
Leonard, said word of a meeting on Thursday in London
was wrong.
"There is no meeting of the board in London tomorrow.
Perhaps next Tuesday," he said.
NEW HEAD OF U.S. BUSINESS
In a sign of how the firm's woes have consumed top
management, Andersen within the last week named
Chicago-based partner Larry Gorrell as head of a new
board set up to oversee its U.S. operations, the New York
partner said.
The board, called the Arthur Andersen LLP
Administrative Board, consists of Gorrell and three
other senior partners, each of whom is a regional
managing partner, the partner said.
"The theory was that the existing leadership had to
devote all their time and energy to working with our
lawyers and public relations people in terms of the
litigation" and the Justice Department indictment, the
partner said.
Underscoring the chaos surrounding Andersen, Gorrell
has hastily scheduled two closed circuit television
meetings for Andersen's more than 2,000 U.S. partners,
according to the internal memo. The first meeting is set
for Thursday, and the second is slated for April 2.
While not specifically mentioning topics for discussion,
Gorrell implored the U.S. partners to attend the closed
circuit broadcast, despite the "extremely short notice"
given them.
"We encourage you to make time on your schedule to
attend both sessions, as this information is critical to all
of our Arthur Andersen LLP partners," Gorrell said in
the memo.
Andersen regional managing partners Louis Salvatore
and John Neimann are also on Gorrell's board, according
the memo.
Andersen has been pushing for a merger deal in a bid to
salvage some of the firm and lessen the pain for its
partners, who have large sums of money tied up its
future. Client defections have hurt the firm's
negotiating position, however.
Since the beginning of the year, 65 clients including
companies such as Delta Air Lines and Merck & Co. ,
have dismissed Andersen as auditor, according to
Strafford Publications' Auditor Trak
Andersen announced talks about an overseas merger
with larger rival KPMG last week, but progress on that
front has been scant as some far-flung Andersen
partnerships have gone their own way and joined rivals
PricewaterhouseCoopers or Ernst & Young.
Partnerships in Russia, Hong Kong, China, New Zealand
and Australia have already broken away.
story.news.yahoo.com
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