ANDERSEN PARTNERS MUST DECIDE

Chicago Tribune: On March 14, Chicago-based Andersen, the accounting giant, was indicted on one count of obstructing justice stemming from the destruction of Enron-related documents. On March 20, the firm pleaded innocent and vowed to fight the charge.
Ever since, Andersen's 28,000 U.S. employees -- out of 85,000 worldwide -- have been loudly playing to the court of public opinion. Their defiant tone has been echoed in public rallies and newspaper ads, even as the firm reeled from the growing defections of clients, employees and overseas affiliates.
The high-stakes criminal trial now is set for May 6. But the future of this 89-year-old Big Five accounting firm now rests in the hands of others.
But not entirely. Including a new offer from former Federal Reserve Chairman Paul Volcker, the partners who own Andersen -- 2,300 of them in the United States -- now face at least three options:
They could hang tough and fight the government in the hopes of proving their innocence. If they also could negotiate settlements with the Securities and Exchange Commission as well as parties that have filed lawsuits against Andersen, they could hope to keep enough clients to rebuild the firm.
Another option is to let the firm break apart, with partners free to take their clients with them. That might well leave Andersen a hollow shell.
Or the partners could pursue a long shot and embrace Volcker's surprise offer to invest his own reputation in saving a smaller Andersen. Volcker's goal would be to rebuild the beleaguered company as an industry model of auditing reform.
You can't say his plan lacks ambition. Volcker proposes that an independent governing board take "full control" of Andersen, get rid of current management and implement stringent changes, including splitting off auditing services from everything else.
Long shot: What makes Volcker's plan a long shot is that it would hinge on overcoming some serious, perhaps insurmountable, hurdles, starting with the criminal indictment. At a minimum, Justice no doubt would insist that Andersen take full corporate responsibility for its employees' actions, something a defiant Andersen so far has been unwilling to do. Going the Volcker route also would require settlement of the SEC actions and numerous lawsuits in a somewhat forgiving way that recognizes that Andersen is rapidly running out of money and resources. Volcker himself would require "the wholehearted commitment of a critical mass" of Andersen auditing partners. No running for the exits.
Reports on Monday suggested that a vote of Andersen partners on the Volcker option may be in the offing. The outcome wouldn't entirely resolve whether Andersen partners will fight for the firm's future.
Such a vote would, though, speak volumes about whether the partners think Andersen is worth fighting for -- or whether they'd prefer to keep open the option to simply cut and run.