Posted on 03/22/2002 6:12:14 AM PST by usconservative
CHICAGO (Reuters) - Chicago Mercantile Exchange Holdings Inc., which runs the world's No. 2 futures exchange, on Friday became the latest home-town client to dump embattled accounting firm Andersen as its auditor.
Chicago Mercantile Exchange said it has not yet hired a replacement for Andersen, which is steadily losing top clients as a result of its role in the Enron Corp. scandal.
Chicago-based Andersen last week lost another local client, food and household goods maker Sara Lee Corp. (NYSE:SLE - news), which hired PricewaterhouseCoopers instead. Some 60 clients have left Andersen since the beginning of the year, according to Auditor Trak, a unit of Strafford Publications in Atlanta.
The decision was a result of ``careful consideration, after new developments regarding Arthur Andersen have emerged,'' CME Holdings said in a statement.
``At this time, the audit committee, board and management of CME Holdings determined it was in the best interests of the company and its shareholders to make a change,'' Jim McNulty, CME Holdings' president and chief executive, said in the statement.
KPMG is considering buying Anderson's European Practice. I'm wondering if those Anderson employees will become KPMG employees AND if KPMG will suffer the stigma of Anderson after buying Anderson's European practice?
Here's the KPMG story:
BRUSSELS (Reuters) - KPMG can win European regulatory approval to buy parts of Andersen as the world's Big Five accounting firms become the ``Final Four,'' but only if it moves in a quick and sure-footed way, competition experts say.
Regulators have in the past frowned on attempts to cut the number of accounting mega-firms from five to four, but experts say the decision on how many firms there should be is now no longer theirs.
``The move to the Final Four has not been created by political will, it's been created by reality,'' said Clive Stanbrook, of Stanbrook and Hooper in Brussels, a competition lawyer with experience in major accounting firm mergers.
Andersen has been losing clients because of question marks over its conduct as auditor of the collapsed energy trader Enron .
Another competition lawyer, who asked not to be identified, agreed that Andersen's current plight would ``probably be a factor'' when the European Commission (EC) considers a merger.
``The deal can certainly be done,'' Stanbrook said, but speed was critical.
``I think the problem that faces them is not so much whether they will be successful but how long it will take, because there will be a horrible hemorrhaging of people if they don't get clearances quickly,'' he said.
The need to move quickly was emphasized this week as Andersen teams in Hong Kong and China said they would join forces with PricewaterhouseCoopers, the largest of the Big Five.
Hours later, number four player Ernst & Young announced plans to absorb Andersen's Russian businesses and drop the Andersen name.
Deloitte & Touche has yet to enter the merger fray.
WHAT'S LEFT?
As each takes a bite, it is unclear exactly how much will be left to merge.
``It's going to be quite a battlefield out there,'' said a Brussels competition lawyer familiar with the issues, who asked not to be identified.
If KPMG does file to purchase parts of Andersen, the European Commission could act in a month, or it could decide the deal needs careful investigation and extend the probe an additional four months. Five months would be too long, Stanbrook said.
Matters are further complicated by the varying strengths of Andersen's offices in Europe, which could require separate analyzes, country by country, he said. Some national competition authorities may also want to look at the cases.
In Spain, for example, Andersen is strong, raising the odds that its authorities will take an interest.
Earlier this week Mike Rake, KPMG chairman for Europe, Middle East and Asia, who is leading the merger negotiations with Andersen's non-U.S. businesses, flew to Spain for meetings, but no reason was given.
A KPMG spokeswoman had no comment on the merger on Friday.
The positive side of the fragmentation, says Stanbrook, is that European regulators may end up only having to consider Andersen's European operations, without the complications of a wider global network to assess.
If the EC stalls or prevents the merger on competition grounds, the accounting industry could still find itself down to four big players.
``If the Commission doesn't allow this, it's throwing the baby out with the bathwater,'' said one lawyer involved in talks.
If KPMG, Deloitte-Touche and the rest buy bits and pieces of Anderson including hiring those Anderson employees, what's to stop another ENRON from happening?
How wide-spread is the ENRON type of corruption within Anderson?
I overheard two Anderson employees on the train a few weeks back, joking about their corporate policy regarding shredding documents. As one was exiting the train presumably to go home at the end of the day, the other yelled out "don't shred any documents tonight!"
If Anderson employees can't take their own company's aggregious behavior in the ENRON case seriously, why should anyone like I care that Anderson is about to go out of business?
Yesterday the Chicago Sun Times featured a front page story "The Face of Anderson" with a group shot of Anderson employees. Anderson is about to launch a TV campaign "I am Arthur Anderson" ... portraying their employees as every day people like you and I who care about their jobs. Talk about going after the pity factor .....
That is a VERY good question and should ANY Congressmen,or senator EVER have the cajones to ask the top level AA people THAT question the INSTANT REPLY wil be simple.....
I REFUSE TO ANSWER BECAUSE MY REPLY WOULD TEND TO INCRIMINATE MYSELF!!!!!
That is a VERY good question and should ANY Congressmen,or senator EVER have the cajones to ask the top level AA people THAT question the INSTANT REPLY wil be simple.....
I REFUSE TO ANSWER BECAUSE MY REPLY WOULD TEND TO INCRIMINATE MYSELF!!!!!
Too late. They're done. If they exist 6 months hence I would be shocked.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.