The Arthur Andersen accounting firm says it is laying off 7,000 U.S. workers. During the past few months, the firm has lost some big corporate clients and has been charged in federal court for its role in the collapse of the Enron energy trading company.
The 7,000 layoffs amount to one fourth of Andersen's workforce in the United States. The firm's Chicago headquarters employs 5,300 people and is expected to be especially hard-hit.
In a statement, Andersen called the layoffs one of the many consequences of the events of the past month. It says the decision is painful, especially in light of the loyalty, commitment, and hard work demonstrated by the firm's employees this year.
Since its audit client Enron went bankrupt last year, Andersen has been charged with obstructing justice. Some of its employees destroyed Enron financial documents while the Houston-based energy trader was under federal investigation.
In recent weeks, thousands of Andersen workers throughout the country have rallied against the government's decision to indict the company. They said the government should have charged the employees actually involved in the document destruction, rather than the firm as a whole. The company is negotiating with the Justice Department about settling the criminal charge before a trial scheduled for May 6.
During the past few months, numerous Enron shareholders and creditors have filed lawsuits against Andersen. The accounting giant has also lost more than 140 of its clients. Andersen handled audits for about 2,300 U.S. companies last year.
Andersen's chief executive announced two-weeks ago he would step down. Former U.S. central bank [Federal Reserve] head Paul Volcker was brought in by the company in February to try to save the firm. He recently proposed a seven-member panel to oversee a restructuring of the company, including selling or merging its non-auditing business.