Arthur Andersen employees face layoffs

CHICAGO, April 5 (UPI) -- As many as 7,000 Arthur Andersen employees braced themselves for mass layoffs Friday in the wake of the Enron scandal another of the firm's overseas affiliates, Arthur Andersen Middle East, joined rival Big Five accounting giant PricewaterhouseCoopers.

Andersen reached agreement in principle Thursday for many of its tax partners and professions to join Deloitte & Touche. The Chicago Tribune and the New York Times, quoting sources within the firm, said as many as 7,000 of Andersen's 28,000 U.S. employees could begin receiving pink slips as soon as next week.

The Wall Street Journal said KPMG LLP was in talks to acquire about 400 professional and administrative staff in the western United States and about 40 partners. Many off-the-job cuts were expected at Andersen's large training facility in St. Charles, Ill., west of Chicago.

Andersen Worldwide's Aldo Cardoso, named acting chief executive officer by partners in London, said his job would be to conduct "an orderly process by which the individual member firms of Andersen Worldwide can pursue transactions that provide the best opportunities for their partners, employers and clients."

Cardoso, 46, replaced Joseph Berardino as interim CEO and will preside over the sell-off of Andersen's tax and consulting services under the plan proposed by former Federal Reserve chairman Paul A. Volcker.

More than one-third of Andersen's $4.5 billion in revenue last year came from tax advice services and about two-thirds of the 1,750 partners work in consulting and finance businesses.

The divesting of the consulting and tax businesses and foreign partners would leave a much smaller Andersen to focus on audit-only work.

Foaud Alaedinn, managing partner of Arthur Andersen Middle East, said joining the world's largest accounting firm was a great opportunity. "We are already one of the largest and best-regarded providers of accounting, auditing, tax, consulting and advisory services in the Middle East, and in combination with PricewaterhouseCoopers we will be able to develop a truly leading position," Alaedinn said in a release.

Andersen LLP hopes to open talks with Justice Department officials on a deal that would dismiss the obstruction of justice charge against the firm for shredding tons of Enron-related documents without Andersen having to enter a guilty plea in court.