- The Washington Times - Thursday, March 28, 2002

CHICAGO (AP) Arthur Andersen LLP is parting ways with its chief executive but not with the legal and business woes that threaten the 89-year-old accounting company's existence.

Joseph Berardino resigned under pressure on Tuesday as CEO and managing partner of Andersen Worldwide, the legal umbrella for the now-tainted Arthur Andersen name. By staying, he said, he "could become an impediment" to efforts to save the firm.

But Andersen remains saddled by a criminal indictment for destroying Enron Corp. documents and by a heavy loss of big clients because of its role in the auditing scandal. And there was no immediate evidence that the resignation had any effect on either problem.

"This is too little, too late," said Arthur Bowman, editor of the industry publication Bowman's Accounting Report. "This doesn't change anything."

Uncertainty reigned after the resignation.

Mr. Berardino said a new U.S. management team for Andersen is working on a plan that will be disclosed in the next few days.

Bankruptcy, he indicated, is a last resort.

Some of the company's 1,700 U.S. partners had begun campaigning for the departure of Mr. Berardino to clear the way for former Federal Reserve Chairman Paul Volcker and a better chance at survival of the firm. But it was far from assured that Mr. Volcker whose rescue proposal has yet to be formally approved by Andersen partners would take over.

Mr. Volcker has said his last-ditch plan to save Andersen can work only if, in addition to top managers' departures, the federal criminal indictment against the company is dropped and a cap placed on its financial liability as Enron's auditor. The Justice Department has not signaled a willingness to abandon the indictment, set to go to trial on May 6.

The Fed ex-chairman, who heads an oversight committee charged with making sweeping reforms at the company and who publicly called for Mr. Berardino to quit, praised the latter for working "tirelessly" to encourage needed reforms.

"I well understand that, after devoting his working life to Arthur Andersen, he feels his resignation as chief executive will help clear the air and facilitate the recovery of Arthur Andersen under fresh management," he said.

Mr. Berardino, meanwhile, took the fall without admitting any personal wrongdoing.

"While my nature is to keep fighting to protect our people and our clients, the fact is that the improper shredding of documents took place on my watch and I believe it is now in the best interests of the firm for me to step down from the CEO position," he said.

In an interview on CNN, where he first disclosed his resignation, he said his company "is in deep stress."

Andersen has lost more than 70 public audit clients this year, and overseas affiliates have been bolting to rival firms. The company and rival KMPG disclosed intentions last week to combine their non-U.S. operations, but no deal has been reached.

The firm suffered another blow on Tuesday as the Securities and Exchange Commission (SEC) asserted in a court filing that Andersen was involved in a scheme that allowed former executives of Waste Management Inc. to inflate earnings by $1.7 billion.

Last year, Andersen paid a $7 million fine to settle an SEC lawsuit accusing the firm of issuing false and misleading audit reports that inflated Waste Management's earnings from the years 1993 to 1996.

Even as they talked of the efforts by current and retired Andersen partners to get Mr. Berardino to quit, some Andersen partners voiced regret at his departure.

"He made some mistakes, but he did the best that he could and he's paying a heavy price," said Jack Gelman, a partner in the New York office. "It was clear that somebody was going to have to take a bullet on this one, and it's the leader's ultimate responsibility."

Aldo Cardoso, chairman of the Andersen Worldwide board of partners, released a statement saying the resignation was "Joe's personal choice."

He said Mr. Berardino had led the firm well, "with integrity and courage, through the most difficult period in its history."

Mr. Berardino, who has been with the firm since 1972, was managing partner for its assurance and business advisory practice in North America before taking the top job 14 months ago and ultimately coming under fire for the Enron scandal.

He sounded a defiant tone on his departure.

"We had a client in stress, we were associated with it, and we've been trying to make a negative into a positive," he said on CNN's "Lou Dobbs Moneyline." "We've been trying to do that by speaking out on reforms, the way our accounting profession can improve itself, and people just don't seem to be listening or taking us real seriously."

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide