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RIVALS AVOID A RAID ON ANDERSEN

Written By: Jim Freer
Published By: South Florida Business Journal
Date: March 29, 2002

Partners at several prominent South Florida accounting firms are not planning to raid troubled rival Andersen for employees.

But when Andersen employees call or send resumes these days, those firms often respond and some might offer jobs soon.

Andersen's problems coincide with a strong job market for accountants and consultants in South Florida, said Richard Preston, a partner in Miami Beach-based CPA firm Gerson Preston and Robinson.

Accounting firms are finding growing demand for their services in South Florida, while an increasing number of Florida's accounting graduates are taking jobs at businesses other than CPA firms.

Many accounting firms would "have room for quality, experienced people from Andersen, or from other firms," Preston said. Other businesses might hire Andersen employees, too.

Preston last week said he planned to talk with one senior Andersen employee who connected via an executive search firm.

Richard Jacobson, managing partner of the South Florida office of Grant Thornton, and Antonio Argiz, managing partner of Morrison Brown Argiz & Co. in Miami, said they have received resumes and calls from several Andersen employees.

"If someone from another CPA firm contacts us, we would call them back if we think we have an opportunity for them," Jacobson said. "But we would not consider poaching people from Andersen, or from any other firm."

The South Florida accountants and Jonathan Hamilton, editor of Public Accounting Report in Atlanta, said inquiries come primarily from Andersen staff accountants and consultants and non-senior managers.

Andersen partners and, to a lesser extent, senior managers have a "vested interest" to stay with the firm because of non-compete agreements and benefit packages, Hamilton said.

Andersen partners who change firms would be under non-compete agreements that would prohibit clients they served at Andersen from immediately becoming clients of their new firms, Argiz said.

"I don't know if I can prevent the market from talking to our people," said Michael Blount, Andersen's Tampa-based managing partner for Florida. "I have asked our people to stick with us until we get our U.S. strategy worked out."

In February, Andersen had 366 employees at offices in Miami, Fort Lauderdale and West Palm Beach.

"We have not had any significant drop in those numbers," Blount said this week.

Nationally, Andersen has lost several dozen audit clients this year amid growing publicity over the firm's role in the Enron scandal.

As of Monday, Blount said he was not aware of any Florida-based companies that have dismissed Andersen as auditor or were planning to take that step. On Tuesday, World Fuel Services of Miami notified the SEC that it had decided to fire Andersen as its auditor.

Andersen was indicted in a federal court in Houston on March 14 on charges of obstruction of justice related to its shredding of documents involving its audit of Houston-based Enron.

The firm pleaded not guilty on March 18.

On Tuesday, Joseph Berardino resigned as CEO, saying he did not want to be an impediment to efforts to save the firm.

Former Federal Reserve Chairman Paul Volcker, brought in to head an independent reorganization board at Andersen, has said he hoped such resignations would convince the Justice Department to drop its indictment of Andersen.

Andersen employees have been holding rallies that criticized the indictment as well.

"This is impacting the lives of our 28,000 employees," said Blount, adding that Andersen's management said that only a few of the firm's employees "did anything wrong."

Argiz and James Horan, KPMG's managing partner for South Florida, both said they disagree with an overall indictment of Andersen.

"I feel that the indictment was very misdirected and inappropriate," Horan said. "I think the Justice Department would be better serving the United States if it were investigating Enron employees."

Andersen's problems stem from questions over the role it played in permitting energy-trader Enron to use off-balance sheet partnerships to keep a series of losses off its financial statements.

After Enron began restating earnings last fall, the company's stock began a tumble that resulted in huge losses for many Enron employees and thousands of other investors.

For Andersen, the result has been a series of lawsuits by Enron shareholders, the indictment and a projected decline in revenue due to clients' defections.

Andersen's non-U.S. affiliates have been in merger talks with other Big Five firms, primarily KPMG.

Andersen's Miami office includes employees of U.S. divisions that advise U.S. companies on projects in other countries, primarily Latin America.

Blount said he expects many U.S. clients would still use Andersen for those services if the firm does not have offices in other countries. One possibility, he said, is that Latin American offices of other accounting firms might work with Andersen on projects in that region.

In the United States, some accounting industry professionals wonder if Andersen will declare Chapter 11 bankruptcy.

"If Andersen survives, I am sure it will have to downsize," said Gary Gerson, a Gerson Preston and Robinson partner.

No matter the outcome for Andersen, the controversy probably will produce significant changes for the accounting industry, added Gerson, who founded his firm in 1958.

Bills in Congress would prohibit public companies from getting auditing and consulting work from the same accounting firm.

One likely result of new limits on audit-consulting ties would be higher fees for audits, Gerson said.