The head of the beleaguered accounting firm Arthur Andersen is resigning. The move comes just a few days after a former U.S. Central Bank official urged Andersen's top management to step aside as a way to help save the company following its involvement in the Enron scandal.
In the few months since it was disclosed that Andersen employees had shredded financial documents belonging to failing energy trading company Enron last year, Chicago-based Andersen has been indicted by the federal government and lost at least 70 of its corporate clients.
On Tuesday, Andersen Chief Executive Officer Joe Berardino told company officials he would step down as soon as a replacement is found. Last Friday, the former head of the U.S. Central Bank, Paul Volcker, urged Andersen's top management to resign. Mr. Volcker wants to install and head an independent board to head Andersen and possibly keep the firm alive. Mr. Volcker hopes that would encourage the federal government to drop the obstruction-of-justice charge it has filed against the company. A trial is scheduled to begin in early May.
Mr. Berardino has been with Andersen since 1972. He became CEO last year. He has characterized the shredding of Enron documents as the work of just a few of Andersen's 85-thousand employees worldwide. At a news conference in January, he urged the government, the company's clients and the public not to let one act ruin the 89-year-old firm's reputation.
"What was done was not in keeping with the values and heritage of this firm," he said. "It was wrong. There is no other word for it. But, 85,000 people did not work on the Enron engagement, 85,000 people did not destroy documents and 85,000 people did not encourage anyone to destroy those documents."
On Friday, thousands of Andersen's Chicago employees marched through downtown, calling on the government to drop the charge against the firm and instead go after the employees who shredded the Enron documents.
Accounting industry analysts say they are doubtful Andersen will have the money to stay in business if its top clients keep defecting.
Andersen is also in danger of losing its overseas affiliate offices. Those in Hong Kong, Russia and New Zealand have already announced they will join other accounting firms. Andersen is negotiating a merger of its non-U.S. operations with those of rival firm KPMG.