Andersen-KPMG close to a deal

BELEAGUERED accountancy group Andersen is close to sealing a deal with rival KPMG aimed at salvaging the bulk of its international operations from the fallout of the Enron scandal.

A deal with KPMG would almost certainly spell the end for the Andersen name, which has become tainted by the firm's role in the collapse of disgraced energy group.

Andersen UK managing partner John Ormerod said he hoped a revenue and profit-sharing deal between the British operation, which employs 6,300 of Andersen's 85,000 staff, and KPMG would be sealed soon as part of a wider combination of the firms' global operations outside the US.

Ormerod said he hoped regulators, who are unlikely to view favourably a reduction in the world's largest accountancy groups to four major firms, would accommodate the 'unprecedented circumstances' surrounding Andersen's businesses outside the US in the wake of Enron's collapse.

A potential tie-up with KPMG would combine the second-largest and fourth-largest accountancy groups in Britain with an initial workforce of nearly 20,000 in this country.

Andersen was unable to guarantee that no jobs would be lost but insisted that it represented the best interest of its clients and staff at its 13 national offices. Andersen's consulting arm will not be included in the merger.

Ormerod said it was still unclear whether discussions with KPMG will result in it absorbing all of Andersen's operations in 84 countries outside the US, and talks surrounding a global deal between the two firms continue ahead of a 1 October deadline. He said there had been 'robust' discussions to try to bring some of Andersen's European operations, which have been looking at ploughing ahead independently, into the worldwide deal with KPMG.

Ormerod is satisfied, however, that Andersen's British arm is completely ring-fenced from the massive liabilities facing an American operation that has been charged by US authorities with obstructing justice by deleting computer files and destroying tons of Enron-related paperwork. But he refused to elaborate on allegations by the US authorities that Andersen's London office was involved in a systematic destruction of documents related to its work for Enron Europe.

Giants on collision course with regulators