Andersen loses first FTSE 100
audit client since Enron collapse
By Chris Hughes, Financial Editor
news.independent.co.uk
23 March 2002
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. |
