While Arthur Andersen LLP fights for its life in a high-profile obstruction of justice trial, the firm has continued to remake itself behind the scenes.
Late Wednesday, Andersen announced that rival Deloitte & Touche would hire away about 2,000 Andersen workers, including nearly 200 partners, across the United States. Andersen did not disclose terms of the agreement.
Earlier, KPMG Consulting Inc. announced it plans to acquire as many as 23 business consulting units of Andersen Worldwide's member firms for up to $284 million. And Ernst & Young LLP acquired Arthur Andersen's Pittsburgh audit and tax practices in a deal involving 87 Andersen employees who will join Ernst & Young's office in that city.
Andersen said the Deloitte and Ernst & Young deals "are consistent with the firm's plan to move forward as a smaller and different firm." Andersen is splitting off its tax and consulting businesses for badly needed cash.
KPMG said it had signed a letter of intent that covers the consulting business of Andersen member firms in the United States, Europe, Asia and Latin America. Those businesses had combined revenue of about $1.4 billion last fiscal year. KPMG has already acquired Andersen's consulting business in Hong Kong and China.
McLean, Va.-based KPMG said completion of the deal is subject to reaching agreements with each of the Andersen member firms. Each deal will require the approval of local partners and regulatory authorities.
KPMG said the purchase of the business consulting practice of Arthur Andersen LLP in the United States depends on "the satisfactory resolution of potential liability issues."
Andersen Worldwide employs 85,000 people at its 84 member firms. KPMG Consulting, which last year split from KPMG LLP, the audit and tax firm, has 10,000 employees worldwide and reported revenues of $2.85 billion during fiscal 2001.
Andersen Worldwide includes Arthur Andersen LLP, the Chicago-based company that audited Enron Corp.'s financial records. Andersen is on trial in Houston for an obstruction charge relating to the shredding of Enron-related documents last year after it learned of a Security and Exchange Commission probe into the Enron debacle.
At the trial on Wednesday, an investigator testified that the abrupt resignation of Enron Corp.'s CEO and an executive's management of partnerships that dealt with the firm led the SEC to begin its probe last August.
Spencer Barasch, an SEC investigator in Fort Worth, said officials opened an informal inquiry on Aug. 28, about two weeks after CEO Jeff Skilling stepped down.
"We were curious why he resigned after only six months in that position," Barasch testified. He said that more importantly, investigators were interested in former Enron executive Andrew Fastow's partnerships that were doing deals with Enron.
"This suggested to us that there could be a conflict of interest in his role as chief financial officer of Enron and his role as owner and manager of these partnerships," Barasch said.
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