Days of reckoning for Andersen

ANDERSEN has never been as popular with top British companies as the other large accountancy firms but there are still some impressive clients on its audit list. Cadbury Schweppes, Carphone Warehouse, Mothercare, Safeway and WPP use the firm to audit their accounts and they and others will doubtless be considering whether to continue the relationship.

The decision has a particular pertinency now. Not only is the Andersen scandal unravelling with almost indecent speed but it is doing so just as the vast majority of companies prepare for their annual meetings. At these meetings, shareholders will be told whether the board recommends the renewal of the auditor's contract. Normally, this is one of the least controversial topics under discussion.

This year, institutions are already wondering what companies that use Andersen are going to suggest. The firm's very survival is being called into question and almost every day brings fresh allegations of wrongdoing. Under such circumstances, Andersen clients risk looking foolhardy at best if they continue to recommend the firm.

Luc's move

WHEN Marks & Spencer announced the closure of its French stores last summer, the outcry from workers and unions could be heard the breadth of France. Then the stores were sold to Galeries Lafayette, which offered to retain all the staff. There was a 10% wage differential that M&S gallantly agreed to make up but even so, only 200 of the group's 1,500 Gallic workforce opted to move to Galeries Lafayette instead of taking the M&S redundancy package.

The company found this ironic but it could afford to be indulgent because time has moved on and its fortunes have taken a dramatic turn for the better.

There are only two pieces of unfinished business left from the dark days of last year when chairman Luc Vandevelde published his radical restructuring plan and promised to focus on improving the core British retail chain.

The first piece of tidying-up is the sale of the US supermarket chain Kings. There has been widespread speculation that local operator Gristede's would buy the business but this is apparently not the case. A deal is near completion, however, and should be signed before the end of this month.

That leaves the more-sensitive issue of Vandevelde himself. Executive chairman since arriving at M&S two years ago, Vandevelde's grip on the business was strengthened when the services of chief executive Peter Salsbury were dispensed with in September 2000. Roger Holmes was appointed as managing director of the UK retail business a few months later, on the promise that he would become group chief executive if he delivered the goods.

Holmes has done a decent job. Recovery is well under way and should be confirmed by the fourth-quarter sales figures due in April, and the full-year results, published in May.

Vandevelde is a proud man. He would not have wanted instantly to promote Holmes to chief executive because that might have meant the former Kingfisher director took all the glory for Marks & Spencer's return to growth. Now, however, enough time has elapsed to allow Vandevelde the satisfaction of taking his share of the credit.

A move to non-executive chairman at the time of the annual results would be extremely well received.

AIB echo

EUGENE Ludwig's career has been steeped in bank regulation. When Allied Irish Banks appointed him to investigate how rogue trader John Rusnak managed to lose $691m (£485m) over five years at its Baltimore subsidiary Allfirst without anyone noticing, the move was widely applauded.

We do not know precisely what Ludwig uncovered because AIB released only the main conclusions of his report. But the US investigator restricted public criticism to certain individuals within Allfirst treasury, and the AIB board felt able to exonerate all its members in the wake of his findings.

Last September National Australia Bank unveiled a $1.75bn write-down at its US mortgage business HomeSide Lending. Three US executives resigned and an independent investigation was instantly commissioned by the NAB board. The conclusions were published less than eight weeks ago. The NAB directors and executives were exonerated and all stayed in their jobs.

The digging-in of heels was met with surprise in Australia, in much the same way that investors here greeted the lack of resignations at AIB. Eugene Ludwig may not have been terribly shocked. He was responsible for the HomeSide report too.