Andersen faces multi-billion bill

ACCOUNTANCY giant Andersen has acknowledged that its UK partners could be forced to pay billions of pounds in damages over the Enron collapse.

Asked whether the firm's UK partners would have to contribute to any damages payout stemming from Enron's collapse, an Andersen spokeswoman said: 'It is difficult to say. As at now, it does not affect the UK but it is far too early to say it never will.

'As we speak it is a US issue. But if you said 'in the future, could it affect the UK partnership', there would be 50 ifs. The thing is, nobody knows.' Her comments followed a crisis conference call between Andersen's UK and US counterparts about the firm's exposure to the Enron fiasco.

Some British lawyers and members of accounting firms with partnership structures said it was likely that Andersen's UK partners would have to help meet any negligence bill the group was ordered to pay. They said concern about the accounting firm's potential liabilities was a key reason for the partners in Andersen Consulting, now called Accenture, wanting to break away from the group last year. Enron investors, who saw the company's value crash from almost $70 billion (£49bn) to almost nothing in a few months, have already filed dozens of legal actions in the US.

Andersen has already fired David Duncan, the lead Enron auditor, saying that he had organised the destruction of thousands of Enron documents. But Duncan is believed to have told US investigators that he had regular, detailed conversations about the matter with Andersen's head office.

Accounting-industry observers have estimated Andersen could be left with a bill of up to $10bn over its role as auditor of the failed US energy giant. It is thought that such an expense would be more than enough to sink the firm. Andersen is also facing a potentially ruinous bill over the collapse of Australian insurer HIH. Its entitlement to be reimbursed under professional liability insurance is doubtful.

Andersen has been desperate to contain the Enron damage to a few people within its Houston office. But its hopes appear to have been shattered by evidence suggesting that officials at Andersen's head office in Chicago used conference calls with the firm's Enron auditors in Houston to discuss destroying documents.