Andersen Employees Fear Fallout
Employees of Andersen reacted with fear, frustration and fury Thursday over the criminal indictment of their firm, once considered the conscience of the accounting industry.
The indictment, which alleges that the firm obstructed justice by shredding tons of Enron Corp. documents, could exacerbate an exodus of Andersen employees and threatens the retirements of the accounting firm’s partners.
In Los Angeles-area offices and at the Chicago headquarters, employees took exception to what they characterized as the government’s exaggerated condemnation of a work force that has labored under great strain. Some knocked their own top management for not keeping them informed about recent developments, such as Andersen’s unsuccessful attempt to find a corporate suitor this week.
But almost everyone worried whether the criminal charges spelled doom for the 88-year-old firm--and their jobs.
“People are shocked,” said Suzanne Gylfe, a 35-year-old partner who works in the global headquarters group in Chicago.
“They’re very, very concerned what this means for them, for their families and for their jobs, and they feel pretty strong that this is an action of a few people that’s being punished,” she said. “The indictment of the firm is just not fair.”
The indictment prompted gallows humor inside Andersen’s headquarters as employees tried to absorb the news.
Bryan Younge, 26, said co-workers gathered around a television to watch the Justice Department news conference announcing the indictment for the alleged destruction of Enron-related documents in the firm’s offices in Houston, Chicago, London and Portland, Ore.
“There were some people walking around saying we’re going to have an indictment party on the floor,” Younge said, adding that as prosecutors outline the case, “a lot of people were kind of chuckling at the indictment [for] saying the shredders were running virtually nonstop for hours upon hours.”
Keeping it light helped employees cope with the news, Younge said, but he predicted that the mood would change as the fallout of the criminal case becomes apparent.
“Spirits are high now, but ... I think in a month from now, it’s going to be a totally different picture,” he said. “Right now, we’re kind of smiling, but we don’t know if we’re going to be out on the street, looking for another job or not.”
Employees in Andersen’s Southern California offices scrambled to learn more about the fate of their company and their livelihoods.
Andersen workers said that until Thursday, they had felt mounting irritation at the lack of information they were getting from the firm’s top executives. The employees found out more from newspaper accounts than they did from the firm, said Nathan Matthews, 30, an auditor in the Woodland Hills office.
“I was livid,” Matthews said. “I found out about the [potential] merger with Deloitte when I picked up the paper Monday.”
Top Andersen executives helped turn that fury outward at an 11:30 a.m. conference call Thursday in which they vowed to fight the criminal proceedings.
“I’m tired of people taking shots at us,” Matthews said. “Enron did not go bankrupt because we shredded some documents.”
The single father of two said he planned to stay with the company, even while many of his co-workers are shipping resumes to rival companies and executive search firms.
Other accounting firms--including second-tier BDO Seidman, Grant Thornton and McGladrey & Pullen--said they have received a steady stream of resumes from Andersen partners, accountants and auditors since the shredding was revealed. This week, the stream became a torrent, some said.
“The sense of urgency from people wanting to leave there has just exploded in the past couple of days,” said an accountant who is negotiating with several Andersen employees.
If Andersen were to collapse, 85,000 employees could be searching for work and some of the country’s largest companies could be scrambling to find new auditors.
Even if Andersen can survive, accounting experts say, the partners probably would lose their equity stakes--essentially retirement funds worth hundreds of thousands of dollars--either in a bankruptcy filing or as part of lawsuit settlements.
The prospect that Andersen could shrivel and die because of a scandal is a “grand irony,” said Rice University accounting professor and historian Stephen Zell.
“Of all the firms that might have given people a reason to believe they might compromise their principles, Arthur Andersen is the one you would least suspect,” he said.
The reason is rooted in Andersen’s history. The firm was founded in 1913--the same year as the Federal Reserve--and it has prided itself on honesty and integrity. Founder Arthur Andersen, a Northwestern University accounting professor, demanded that employees “think straight, talk straight,” and he made it a point of pride not to bow to pressure from clients.
After Andersen’s death in 1947, successor Leonard Spacek continued to emphasize ethics as he advocated for reforms of the accounting profession in general.
“He was most proud of the reputation of the firm and its integrity,” said son Bruce A. Spacek, 66.
“I can’t imaging anything worse than an accounting firm, which doesn’t have anything to sell but its integrity, being criminally indicted,” Spacek said. “These are supposed to be the watchdogs.”
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Frammolino reported from Chicago, Pulliam Weston from Los Angeles. Times staff writer Elena Gaona in Los Angeles contributed to this report.
