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CNN Live At Daybreak

Financial Observers say Arthur Andersen Moving Closer to Bankruptcy

Aired March 27, 2002 - 05:18   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: Financial observers say Arthur Andersen is moving closer to bankruptcy now that its CEO has resigned and the company remains under federal indictment.

We have the latest on the story from CNN's Allan Chernoff in New York.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN CORRESPONDENT (voice over): Joseph Berardino says he'll step down in the hope that it will help his company survive. He made the announcement in an exclusive interview with Lou Dobbs "Moneyline."

JOSEPH BERARDINO, FORMER CEO, ANDERSEN: I felt I had to take this step today to put an exclamation point behind the voices of our people to say that we are serious and we're a serious firm that deserves to continue here in the United States.

CHERNOFF: Berardino told CNN he was following through on suggestions that he and other Andersen leaders had presented to Paul Volcker, head of Andersen's independent oversight committee. Last Friday Volcker called for a change in management.

PAUL VOLCKER, ANDERSEN OVERSIGHT BOARD: We're willing to take control of the firm if some very serious conditions are met that will certainly involve changes in leadership.

CHERNOFF: Berardino has been the public face of Andersen since the Enron scandal broke, testifying before Congress, firing chief Enron auditor David Duncan and pleading Andersen's case before the media. But the Justice Department's obstruction of justice lawsuit has proven to be a crushing blow, triggering dozens of long time clients to jump ship.

Berardino tells CNN Andersen intends to follow through on the Volcker plan. Volcker's group will become the de facto board for Andersen U.S. Top Andersen managers will step down and Andersen will split its auditing and consulting businesses, that is, if Andersen can stay above water.

ARTHUR BOWMAN, BOWMAN'S ACCOUNTING REPORT: The organization we know as Arthur Andersen will probably take bankruptcy and definitely go through a dissolution of the partnership.

CHERNOFF (on camera): Next Tuesday and Wednesday, Andersen's worldwide board plans to meet in London, where a successor to Berardino is likely to be picked.

Allan Chernoff, CNN Financial News, New York.

(END VIDEOTAPE)

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