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Corporate Fallout

Elizabeth Brackett of WTTW-Chicago reports on how Arthur Andersen's corporate problems are affecting its employees.

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  • ELIZABETH BRACKETT:

    It's been 27 years since Eileen Dowd first came to work at Arthur Andersen. She began as a clerk, and today at 53, she is the director of Human Resources, dealing with the personnel concerns of some 4,000 employees in the Andersen home office in Chicago.

  • EILEEN DOWD, Andersen Manager:

    Did you all read it?

  • ANDERSEN EMPLOYEE:

    Yes.

  • EILEEN DOWD:

    Is that not great?

  • ELIZABETH BRACKETT:

    And today, the biggest concern is whether their company will survive. Employees were stunned by the indictment of the entire firm by the Justice Department.

  • LARRY THOMPSON, Deputy Attorney General:

    The indictment catalogues allegations of widespread criminal conduct by the Arthur Andersen firm.

  • ELIZABETH BRACKETT:

    The indictment charges Arthur Andersen with one count of obstruction of justice for wholesale destruction of documents relating to their work for Enron.

  • EILEEN DOWD:

    I think it's unjust because it is blaming the entire firm for the actions of a few. I did not do anything to bring the circumstances that are now facing me about. I come to work. I do my job. I don't know anything about Enron. I did not know anything about document destruction or anything else.

    I feel like I've been treated as if I am the criminal. I have to make different choices in my life. I have to be prepared to lose my life the way it is, and all because of this indictment.

  • ELIZABETH BRACKETT:

    The indictment has left the 89-year-old venerable accounting and consulting firm scrambling to stay alive. More than 100 clients have dropped Andersen, and the number increases daily. Six international Andersen partners have said they would join other firms. CEO Joseph Berardino resigned weeks after admitting to a congressional panel that individuals in Andersen's Houston office shredded Enron- related documents.

    But in a March 14 letter to Andersen attorneys, the government contends that: "The conduct was not the isolated act of a few low-level employees… rather the obstruction efforts engaged the attention of numerous Andersen personnel, including partners, in multiple offices, including Chicago…"

    Chicago partner Robert Wentland is on the business consulting side of the firm. Like most of the 1,700 Chicago partners, he says he knew nothing about Enron and was shocked by the indictment.

  • ROBERT WENTLAND, Andersen Partner:

    The word "indictment" is not a term that I use regularly, so frankly, I wasn't… I couldn't have forecasted these things any differently than anyone else. So a lot of things are new to me in this environment, but certainly the firm being indicted was a great surprise.

  • DEMONSTRATORS:

    We are Andersen! We are Andersen!

  • ELIZABETH BRACKETT:

    The indictment affects not only the 85,000 Andersen employees worldwide– 28,000 in the U.S.– it also impacts the lives of 1,066 retired Andersen partners. Sixty-seven year-old Robert Kelley retired five years ago following a stroke. As the managing partner for international affairs, Kelley had responsibility for all global issues affecting the firm. He says if the firm folds, retirees would lose their $3,500-a-month retirement benefit, plus health care coverage.

  • ROBERT KELLEY, Retired Managing Partner:

    They should have taken a page out of the military book and said, "Hey, we need one of those smart bombs," and just go in there and get these six or eight or ten people — maybe 20 — that may, may have committed some obstruction of justice. But what did they do? They pitched a nuclear bomb, and the collateral damage is everywhere, including me.

  • DEMONSTRATORS:

    We are Arthur Andersen!

  • ELIZABETH BRACKETT:

    The indictment motivated Andersen employees to take action. Rallies were held in cities across the country. In Chicago, 4,000 people picketed at the downtown headquarters.

    Twenty-four year-old Katie Dorn is a campus recruiter for Andersen. She began on the consulting side as an intern but switched to recruiting when she joined the firm full-time three years ago.

  • KATIE DORN, Andersen Employee:

    I decided to go to the rally because there was such a sense of community amongst all of us that I wouldn't have missed out on that, first of all, in a heartbeat.

    Secondly, I think that really I felt that the more people were out there, the more this was going to be seen. And so, you know, even though I'm just another person, I definitely wanted to be a part of it. It made me feel absolutely thrilled to be a part of this organization. It made me feel excited about the prospect that, you know, this could take a turn for the better and we could pull out of this and come together as a firm.

  • ELIZABETH BRACKETT:

    The employees' campaign also included full-page ads in major newspapers across the country laying out the firm's concerns. The Justice Department responded to the Andersen employees' rallies by filing court documents saying the employees' actions could potentially tamper witness testimony and unfairly influence the jury selection. The accusation infuriated Kelley.

  • ROBERT KELLEY:

    They say it's obstruction of justice. I say it's destruction of an institution called Arthur Andersen. And somewhere, as I recall, we've got equal protection under the laws, and the right to assembly is one of those rights in the ten Bill of Rights.

  • ELIZABETH BRACKETT:

    But the retired partners have also criticized the firm's actions in the crisis. They have filed suit against the current partners to try and prevent them from breaking up the company by taking their clients and leaving for other firms.

  • ROBERT KELLEY:

    We're simply asking if… for them to live up to the responsibilities of the partnership agreement and the inter-firm agreement. That's it. You know, imagine this: You've got a body that's bleeding. You know, they're bleeding clients, they're bleeding people and they're bleeding money, much of which is going to some lawyer somewhere. And what we're trying to do is say, "Hey, let's stop the bleeding, get the ship upright and sail on the course."

  • ELIZABETH BRACKETT:

    Andersen has denied published reports that 6,000 layoffs are imminent. Still, worried employees are making a steady stream to Eileen Dowd's office. Because Andersen is self- insured, health insurance is a big concern.

  • EILEEN DOWD:

    I get questions like, you know, just last week an employee called because his nine-year-old son is scheduled for open heart surgery in June and he wants to verify that he'll still have insurance for that. Well, I pray and hope that in June we're still a going concern.

  • ELIZABETH BRACKETT:

    And Dowd has concerns of her own.

  • EILEEN DOWD:

    I have always, I mean, in my life had two major commitments: To my son and to my job. How do I explain to him that his options for college might be impacted by this… this indictment, and how do I explain the justice of that, which I can't figure out for myself?

  • ELIZABETH BRACKETT:

    Many Andersen employees see a plan put forward by former Federal Reserve chairman Paul Volcker, after being hired by Andersen, as the best hope for saving the firm.

    The plan would install a new seven-member board, would oust current management as needed and shed all non-auditing business. Volcker introduced two partners to guide the transition. A successor to Joseph Berardino is expected to be named shortly.

  • PAUL VOLCKER, Chairman, Oversight Board:

    Obviously, the firm will be smaller. It will be smaller because if it's an auditing only firm, it's going to lose the consulting, the tax and some of the ancillary things that it was doing.

  • ELIZABETH BRACKETT:

    Volcker also says the government must drop or settle the indictment to make the plan work. That is seen as a long shot by many. But even with all the bad news, partners like Robert Wentland, whose job on the consulting side would disappear under the Volcker plan, remain hopeful.

  • ROBERT WENTLAND, Andersen Partner:

    I think the momentum is certainly to move in the direction of separating that, and by adopting the Volcker plan, I think we're suggesting that. Yes.

  • ELIZABETH BRACKETT:

    So do you feel more at risk than, say, the people on the audit side?

  • ROBERT WENTLAND:

    Um… at risk in terms of what?

  • ELIZABETH BRACKETT:

    Of losing your job?

  • ROBERT WENTLAND:

    Oh, I don't… I don't feel that. No.

  • ELIZABETH BRACKETT:

    Do you feel at risk for losing your job?

  • ROBERT WENTLAND:

    Oh, I… I… I don't think so.

  • ELIZABETH BRACKETT:

    Others are less optimistic.

    Have you started sending out resumes?

  • EILEEN DOWD:

    No. No. And, you know, I… it's on my "to do" list to write it this weekend. I am taking those steps to prepare, but honestly the hardest thing is just doing the mental… start to believe this, because it really is real.

  • ELIZABETH BRACKETT:

    Robert Kelley takes a longer view.

  • ROBERT KELLEY:

    I believe in the myth of the phoenix, and the phoenix was reborn morally, ethically after hitting a very difficult time, and I think that's the same for Andersen.

  • ELIZABETH BRACKETT:

    At the moment, Andersen is expected in court on the obstruction of justice charge on May 6.

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