David Duncan, the Andersen accountant who headed the Enron audit, has pleaded guilty to obstructing justice and is co-operating with federal prosecutors in exchange for the hope of a reduced sentence. He now admits that he led the shredding effort in which huge quantities of Enron related documents were destroyed at the company's Houston offices just as government investigators were closing in, and that it was done Ointentionally and corruptly'. Duncan must now testify at any related court proceeding, which means he will become a key witness in actions against Enron.
Andersen itself - under attack on all fronts since both the current class actions have been widened to include Anderson's worldwide and international offices - was charged with obstructing justice back in March. It recently met the Department of Justice in the hope of reaching a settlement on that charge, although insiders say the talks are stalled. In any case by the time the charge is heard and certainly before the class actions reach the courts there will be little left of Anderson to chase. The company is now headed by Aldo Cardoso, previously head of its Anderson Worldwide co-ordinating body, following the resignation of Joe Berardino. It announced 7000 redundancies at the start of April. Plans for a grand worldwide merger with another 'big five' accountant, KPMG, were abandoned when major clients and Anderson affiliates overseas began signing agreements with other firms. The Hong Kong and China offices were the first to go, joining with Pricewaterhouse Coopers, quickly followed by the Russian office, which merged with Ernst & Young. Other mergers since then have been completed by offices in New Zealand (Ernst & Young) Spain (Deloitte & Touche), UK (Deloitte & Touche), Middle East (Pricewaterhouse Coopers), central Europe (KPMG), Singapore (Ernst & Young), Norway (Ernst & Young), Poland (Ernst & Young) and Brazil (Deloitte & Touche).In the US, more than 100 accounts have been lost. The latest to go, software maker Oracle, has moved its business to Ernst & Young.
Plaintiffs taking action against the accountant in attempts to halt the breakup, fearing that the company will have few assets left to fund compensation, seem so far to have been unsuccessful. Andersen itself has posted a strongly worded statement to the effect that involving the group's non-American members in US litigation would have no basis in law - under Swiss law the group's Swiss Societe Co-operative status allows its members to share common marketing and operating strategies without sharing financial obligations.
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