Crisis puts pressure on merger bid

ANDERSEN is searching for a partner in order to merge in a last desperate attempt to avoid collapse. Earlier this week rival firms Ernst & Young and Deloitte Touche Tohmatsu pulled out of negotiations because of the impending legal case.

Talks are continuing with KPMG, another of the big five accountants, to take over some of Andersen's overseas divisions, including Japan. But hopes of a deal are dwindling.

The Chicago-based accountant has already lost clients including FedEx, drugs giant Merck and the housing finance institution Freddie Mac.

In the UK Andersen employs 400 partners and 7,000 other staff, mostly in London, though it also has operations in Cambridge, Bristol, Birmingham, Glasgow and Edinburgh.

Until the Enron scandal it was a favourite with the brightest graduates, attracted by its slightly brash American style and its bigger than average pay packets.

The firm has close links with the Government, helping to advise Gordon Brown on his £5bn windfall tax on the utilities in 1997.