Arthur Andersen CEO Resigns
Berardino wrote in an e-mailed message to his Andersen colleagues Tuesday, ”In the wake of an unprecedented criminal indictment of the U.S. firm, I have concluded that my continuing as worldwide CEO could become an impediment to the efforts … to save the U.S. firm.”
“The fact is that the improper shredding of documents took place on my watch … and I believe it is now in the best interests of the firm for me to step down from the CEO position,” he said.
Berardino’s resignation comes as former Federal Reserve chairman Paul Volcker, called in by Andersen to head an internal oversight board last month, continued to push for a settlement with the Justice Dept. over obstruction-of-justice charges.
Volcker said the CEO’s decision demonstrated the firm’s commitment to reform, and he commended Berardino’s “tireless” efforts to address the company’s problems.
The Justice Department claims Andersen obstructed justice by ordering the destruction of Enron audit documents after the Securities and Exchange Commission had announced an investigation into the energy giant’s accounting practices.
So far, the Justice Department has not signaled that it would drop criminal charges against Andersen. The trial date is scheduled for May 6.
Business for the “Big Five” accounting firm has dropped dramatically since the indictment was announced two weeks ago. Thirteen companies ended their relationships with Andersen last Friday alone.
Andersen has “a lot of great people who deserve a career. And if my sacrifice helps just a few of those, I will feel really good about what I’ve done today,” Berardino told CNN Tuesday.
Berardino, who assumed Andersen’s reigns 14 months ago, said he would remain chief executive until the embattled firm found a replacement. Although he has stepped forward to take the blame in the shredding of Enron audit materials, the 52-year-old Berardino has not acknowledged any personal wrongdoing.
The news of Berardino’s move came as the federal Securities and Exchange Commission accused Andersen of assisting in the falsification of client Waste Management, Inc.’s financial statements, allowing former executives to overstate earnings by $1.7 million over a five-year period.
Last year, the SEC fined the firm $7 million for ‘improper professional conduct’, including overstating Waste Management’s earnings by $1.4 billion. It was the first successful case against an auditor in over 20 years. In May 2001, Anderson also paid $110 million to Sunbeam shareholders to settle lawsuits stemming from inflated earnings statements.