Beleaguered Arthur Andersen divests tax-operation assets

By Dave Carpenter
Associated Press

CHICAGO — Signaling the breakup of its U.S. operations, Arthur Andersen LLP announced yesterday that a "significant" number of its U.S. tax partners and professionals will join rival Deloitte & Touche.

Terms were not disclosed.

Andersen's U.S. tax services bring in between $750 million and $1 billion a year in revenue, according to Arthur Bowman, editor of the industry publication Bowman's Accounting Report. About a quarter of Andersen's 28,000 U.S. workers are in the tax group.

Andersen's U.S. operations are in jeopardy as a result of the Enron Corp. scandal. The firm hopes to survive as a slimmed-down company focused on auditing.

"This transaction is fully consistent with our commitment to move quickly on the Andersen reforms initiated by Mr. Volcker," said Larry Gorrell, managing partner of Arthur Andersen, the U.S. arm of Andersen Worldwide.

Former Federal Reserve chairman Paul Volcker is head of an oversight board attempting to reform Andersen and keep it alive as an independent firm.

"While our firm will retain appropriate tax expertise in a manner consistent with these reforms, Deloitte will provide a significant number of our people with continuing career opportunities and our clients with continued quality service from recognized and respected professionals."

Andersen's employees, meanwhile, were bracing for what the company has said would be "inevitable" layoffs among its 28,000 U.S. staffers.

Andersen has 1,700 U.S. partners in tax, consulting and audit services. It was not clear how many would leave under the deal. Andersen said it anticipates a closing date of as soon as April 30.

The announcement followed weeks of negotiations between Andersen and other members of the Big Five accounting firms over its assets. Previous efforts to sell off assets snagged over the issue of liability for the many lawsuits Andersen faces from its role as chief auditor for the bankrupt firm Enron.