Auditor Arthur Andersen name returns decade after Enron’s fallComment on this story
Robert Schmidt Washington
MORE than a decade after Enron auditor Arthur Andersen cratered in the wake of a federal indictment, some of its former partners are resurrecting the name.
WTAS, a San Francisco-based tax consultancy founded out of Andersen’s ashes, will go by AndersenTax as of this week.
The new identity is designed to capitalise on the defunct company’s reputation for quality work – before it was sullied in 2002 by charges of document shredding and obstructing a Justice Department investigation into book-cooking at Enron.
“Our issues with Enron were the mistake of a few,” said Mark Vorsatz, WTAS’s chief executive, who started the company 12 years ago with 22 other former Andersen partners.
“Irrespective of Enron, we thought we were the benchmark in the industry.”
While the newly christened AndersenTax is counting on the name change to set the firm apart as it expands in the US and overseas, the moniker may dredge up memories of the accounting scandals that drove Enron, WorldCom and other companies into bankruptcy.
The corporate failures cost shareholders billions of dollars and spurred Congress to push through tougher oversight of auditors in the 2002 Sarbanes-Oxley Act.
Lynn Turner, a former chief accountant at the US Securities and Exchange Commission who helped write the law, said it was “incredible” that a company would seek to revive the Andersen name.
“Unbelievable”, he said. “It’s like some people just live in their own world.”
Vorsatz took issue with those who saw Arthur Andersen as symbolic of accounting fraud. The firm’s conviction, he noted, was overturned by the US Supreme Court in 2005.
It was too late, however, to prevent some 85 000 people, most not involved with Enron, from losing their jobs. Enron, a Houston-based energy trading firm, collapsed in 2001.
Vorsatz said his firm, which had 150 partners and about 1 000 employees, paid a sum he declined to disclose for the rights to the Andersen name. Calling it AndersenTax underscored that the firm did not do auditing, he said.
WTAS also did polling on the change and had been getting public relations advice.
“This was a fairly thoughtful, deliberative decision,” Vorsatz said.
As part of its research, WTAS surveyed 286 “tax services decision makers” in the US, UK, France and China and found that more than half the respondents in all four countries had a “very favourable” or “somewhat favourable” view of Arthur Andersen.
The survey also showed that at least half of those polled in each country would be “much more likely” or “somewhat more likely” to work with a “respected global tax advisory firm” that changed its name to Andersen.
On the flip side, the poll showed that more than 60 percent of those surveyed in the US, UK and France saw Andersen as a “tarnished brand”. In China it was 44 percent.
Regardless of how the public felt about the new name, Vorsatz said he was already hearing praise from Andersen alumni. Many were eager to have their former employer’s reputation restored, he said.
“I had colleagues who worked there for 30 years and retired, and they are walking around with a big stain on their chest,” Vorsatz said.
“We’re going to change that.” – Bloomberg