Andersen Loses Las Vegas Hotel, Keeps Others
The Hard Rock Hotel & Casino in Las Vegas has dropped accounting firm Andersen amid questions surrounding its audits of energy trader Enron Corp., but other major hotel and gaming clients said they would stay with the firm for now.
Andersen acts as auditor for most of the biggest casino operators in Las Vegas, including MGM Mirage, Harrah’s Entertainment Inc. and Mandalay Resort Group. It is also a major auditor for the related hotel sector, with a client list including Marriott International Inc. and Hilton Hotels Corp., the No.1 and No.3 U.S. operators. So far, only Hard Rock has said it was dropping Andersen, which admitted to shredding Enron documents. Enron filed for Chapter 11 bankruptcy protection in December.
“The Hard Rock Hotel & Casino is a highly principled and ethical organization,” Chief Financial Officer Jim Bowen said in a statement. “Our board of directors and management group were uncomfortable with retaining Arthur Andersen as our company’s auditors.”
Despite the controversy surrounding the accounting firm, other major casino and hotel clients of Andersen said they have no plans to switch auditors.
“Our audit committee has always been very diligent in reviewing the auditor,” said Marc Grossman, spokesman for Beverly Hills-based Hilton. “Andersen is our auditor, and they’ve done a good job.”
Hilton and officials from other hotel and casino companies said their auditors must be approved by shareholders each year at their annual meetings. They said committees of company board members will decide prior to those meetings whether to recommend shareholder approval for Andersen’s continued role as company auditor.
MGM Mirage spokesman Alan Feldman said the auditor issue is less critical for the casino industry because it is so heavily scrutinized. “Our industry is so highly regulated that any and all business relationships outside joint ventures have to be approved by state authorities. The kinds of transactions that existed in the Enron case couldn’t exist in our industry.”
