- The Washington Times - Tuesday, March 19, 2002

FRANKFURT, Germany (AP) Andersen and KPMG confirmed yesterday the two accounting giants are in talks about merging their operations outside the United States.

"We are currently exploring how our current business activities outside the United States in the most important countries of Europe, Africa, the Near East, Canada, Asia and Latin America can be merged," Harald Weidemann, head of KMPG Germany, said in statement issued by the two companies.

Although the statement was made by German officials, a spokeswoman at Anderson's German headquarters in Eschborn said that it applied to both companies worldwide, except for the United States. She spoke on the condition of anonymity.

"This is a chance that we want to use in the interest of our clients and our employees," Christoph Gross, head of Andersen Deutschland, said in the statement.

A spokesman at KPMG headquarters in New York declined to comment.

The news comes after several European divisions of the Andersen accounting network had said they aim to quit the international firm amid an investigation into the collapse of the U.S. energy giant Enron Corp.

Some have held merger talks with the other Big Five accounting firms that dominate the global market.

Andersen Switzerland spokesman Claude Baumann told the Associated Press that the branch planned to leave Andersen Worldwide and merge with a rival company.

"We are still in discussion with our competitors," Mr. Baumann said. "Probably in the next few days something will come up." He declined to give further details.

Geneva-based Andersen Worldwide is the overseeing body of Andersen, a global network of professional service companies in 85 countries, including Arthur Andersen in the United States.

In the first indictment in the Enron case, a U.S. federal court last week charged Chicago-based Andersen with obstructing justice by destroying thousands of documents and deleting computer files about its audit on Enron. Andersen denies the charges.

Andersen auditors reportedly signed off on questionable accounting practices that, when uncovered late last year, led to Enron's December collapse the largest in U.S. corporate history.

Several blue-chip corporate clients have dumped Andersen in the United States. The company has held talks with all the other Big Five firms about a possible sale of some or all of its assets. But talks have faltered over concerns about Andersen's potential liabilities from the Enron case.

Although the Andersen network's structure means the foreign divisions are not legally affected by the U.S. case, the Enron investigation has harmed Andersen's international reputation.

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