Andersen Developments Around The World
DOJ Hints at Scenario in Which it Would Drop The Indictment Against Andersen
The Wall Street Journal is reporting that a possible change in tactics by the Department of Justice has emerged in which it may consider dropping the indictment against Andersen, provided the firm admits it illegally shredded documents. If pursued, this change offers both Andersen and the DOJ some wiggle room in which the firm would accept full responsibility for its actions but would stop short of requiring the firm to plead guilty in court. A top Justice Department official was quoted as saying, "All possibilities are open, including a settlement or a trial."
Reports from the global Andersen Board meeting being held in London this week indicate that Aldo Cardoso, head of Andersen's operations in France, has been named interim CEO of the worldwide network, succeeding Joe Berardino who resigned from that position last week. Mr. Cardoso currently serves as Chairman of Andersen's Worldwide Board.
Andersen US moved forward yesterday in its planned separation of its auditing services from all other business lines by hiring Gleacher Partners, an investment banking firm, as a financial adviser.
Gleacher will help Andersen conduct "an orderly and thorough evaluation of all options for maximizing the value for all of our stakeholders", said Larry J. Gorrell, the managing partner of Andersen. "And we will move ahead with this initiative as expeditiously as possible."
In February, Andersen's offer of $800 million to settle the Enron class action suit was rejected by Enron stakeholders. People involved in the discussions indicate that yesterday, the parties agreed to an amount that Andersen could pay. The (final?) figure: $250 million in insurance payments and less than $50 million coming from Andersen's U.S. operation and it's remaining U.S. affiliates.
As reported earlier this week, questions are being raised about the solvency of Andersen's insurance company, Professional Services Insurance, because of the failure of Andersen to meet a $100 million premium payment last month. That development led to an outcry earlier in the week when the insurer indicated it was unable to pay over $200 million in a settlement to the Baptist Foundation for Andersen wrongdoing in that case.
Now, the New York Times reports that Andersen has agreed to pay a $125-$130 million premium to Professional Services Insurance, which will clear the way for settlements to the Baptist Foundation and for any future settlement in the Enron situation.
To help gain consensus among the owners of the firm, Andersen is holding a nationwide meeting of partners today to discuss some of the following:
- How to finance continuing operations
- Whether and how to change firm management
- Settlement of the Baptist Foundation case
- Changing the approval process for management negotiation of sale of business lines
- The possibility of amending partnership agreements to allow partners to pursue other career options