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CNN Live At Daybreak

Andersen Losing Business After Enron Debacle

Aired January 30, 2002 - 06:13   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: Arthur Andersen, one of the nation's big five accounting firms, admits it is losing business because of its association with Enron, that big failed energy company. But Andersen is striking back, hoping to save its reputation and its bottom line profits.

More from CNN's Peter Viles.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice over): Embattled Andersen Chief Joe Berardino again tried to influence the news agenda in these full page ads, promising: "In the near future, Andersen will announce several significant changes in the way in which we do business."

That news, though, came as Delta Airlines confirmed it is reevaluating its 53-year relationship with Andersen. The auditing firm admitted on Monday, it is losing some business over this scandal.

With $9 billion in annual revenue, Andersen has already lost $47 million in annual fees from Enron. The loss of Delta's business, $5.9 million a year would be a symbolic blow, if not a huge economic one.

PROFESSOR RAY BALL, UNIVERSITY OF CHICAGO: An auditing firm really only offers two things, independence and expertise, and I think both of those are in play. And perceptions on this I'm sure are quite fragile and it's a very proud, very strong accounting firm, and the danger is that they won't be able to bring it back.

VILES: Congressman Billy Tauzin was turning up the heat Tuesday, firing off a letter, demanding to know whether it did any consulting work on roughly 40 Enron partnerships, an exotic list that includes the Condor, Rawhide, Osprey, Yosemite, and Big Doe families.

Tauzin is also digging into past Andersen accounting scandals at Sunbeam and Waste Management, demanding to know exactly when during those scandals, Andersen gave the written order to preserve all documents. And when Congress is done, the courts will follow. Lawyers are predicting, perhaps hopefully, huge pay outs by the firm.

PAUL GELLER, CAULEY GELLER BOWMAN & COATES: I think for sure at the end of the day, when people talk about which accounting firm has paid the largest shareholder lawsuit, it's going to be Andersen, and it's going to be in the Enron situation. VILES (on camera): Arthur Andersen is no stranger to these kind of situations. It paid $110 million to settle shareholder lawsuits after the Sunbeam fiasco. Now the record, $335 million, was paid by Ernst & Young after the Cendant (ph) scandal. And the reason people are talking about an even higher number in this case is that the losses on Enron's stock are much higher than the losses on Cendant (ph) or Sunbeam.

Peter Viles, CNN Financial News, New York.

(END VIDEOTAPE)

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