Sun Savings Forced to Fire Arthur Young Co.

Federal regulators, believing that an “apparent conflict of interest” exists between a former Sun Savings & Loan Assn. chairman and the company’s outside auditors, have forced Sun to end its relationship with the Arthur Young & Co. accountancy firm.

Neither the alleged conflict nor the parties involved were identified in a brief announcement made by Sun on Thursday night.

However, sources close to Sun said Friday that the alleged conflict involves ousted Sun Chairman Daniel W. Dierdorff and Kenneth Clare, Arthur Young’s partner-in-charge of the Sun account.

The alleged conflict is alluded to in a confidential report commissioned last year by Sun directors in which alleged improprieties by Dierdorff were detailed.

In that report, the San Diego law firm of Fredman, Silverberg & Lewis claimed that Dierdorff created a “secret” checking account under the fictitious name of Dan Danzer.

Dierdorff’s Asserted Claim

Dierdorff, according to the report, “convinced (Sun’s) outside auditors not to report the existence of the account to the board of directors, pending his providing documentary support to Arthur Young as to the sources of the cash. That support was never provided to Arthur Young (and) Dierdorff claims these large amounts of cash were attributable to gambling winnings and outside, wrestling-related income.”

Neither Clare nor Dierdorff could be reached for comment.

Officials at Sun and Arthur Young insisted that the action by regulators does not reflect on the quality or accuracy of Sun’s financial statements.

“We will defend our work and do not believe our independence was impaired,” said Gary Johnson, managing partner of Arthur Young’s San Diego office.

Johnson said his firm was fired by Sun “under pressure from the Federal Home Loan Bank Board (which has) commenced an investigation into (the) alleged conflict of interest . . . “

Sun’s board of directors was “aware of all the facts in this matter and decided to retain us until due process determined if this alleged conflict impaired our independence,” said Johnson.

The FHLBB would not comment on the action.

Sun said it will retain a new outside auditor.