Arthur Andersen CEO resigns

Posted 7:40AM on Wednesday 27th March 2002 ( 23 years ago )

CHICAGO - Arthur Andersen LLP chief executive Joseph Berardino resigned Tuesday, succumbing to increasing pressure as a result of Anderson's role in the Enron scandal. His announcement came four days after former Federal Reserve chairman Paul Volcker urged top management to step aside, clearing the way for him to install and head an independent board in a last-ditch plan to save the company. The key element of Volcker's plan is the dismissal of a federal indictment against Andersen alleging obstruction of justice in destroying Enron-related documents. The Department of Justice has not said whether it would consider such an action. Berardino disclosed his decision late Tuesday as Andersen partners, in internal company e-mails, were stepping up pressure on him to quit. He said he would remain in charge temporarily until a successor is chosen. "I felt I had to take this step today to put an exclamation point behind the voices of our people ... to say that we are serious and we're a serious firm that deserves to continue here in the United States," Berardino said on CNN's "Lou Dobbs Moneyline." "We're in deep stress," he said of the 89-year-old Chicago firm, adding that he "can't begin to predict" what the Department of Justice will now do. Andersen has lost more than 70 clients this year in the wake of the scandal involving its auditing client Enron, and its overseas affiliates have been bolting to rival firms. With big companies defecting daily to other members of accounting's Big Five, industry experts are doubtful whether Volcker's plan or any other can prevent the firm from folding. Volcker, who was tapped early last month to head an oversight committee charged with making sweeping reforms at the firm, has also said a cap must be placed on Andersen's financial liability from the Enron scandal if it is to survive. Andersen's 1,700 partners have been urging Berardino increasingly to resign, according to several partners interviewed Tuesday. Retired partners also have been pushing for his ouster in hopes it can help keep Andersen afloat. His resignation, said Chicago-based partner Kathy Scherer, may be "the only way that the Justice Department might ease up" on Andersen. Berardino, who has been with the firm since 1972, has been the head of Andersen since January 2001. He also is managing partner-chief executive of Andersen Worldwide, the legal parent of Arthur Andersen. A person familiar with the situation said Andersen's board is flying to London this week to talk about a succession plan, even as discussions continue about combining its non-U.S. operations with those of rival KPMG.

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