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Arthur Andersen expands
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January 24, 2000: 5:01 p.m. ET
Accounting firm launches new division to handle Internet-related businesses
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NEW YORK (CNNfn) - Arthur Andersen has established a new division called Arthur Andersen Ventures, which will help the Chicago-based tax and audit firm capitalize on the growth of Internet companies.
Arthur Andersen Ventures will oversee a $500 million fund for e-commerce and new media businesses. Young Internet firms will be able to apply for Andersen services in return for a stake in the company.
"Our vision is to become the partner for success in the new economy," said global managing partner Jim Wadia. "We are positioning ourselves as the firm to help clients create, measure and manage value in the new economy."
Arthur Andersen also announced an alliance with Silicon Valley venture capital firm U.S. Venture Partners. Under the agreement, clients of U.S. Venture Partners will have access to Arthur Andersen's services.
Finally, Arthur Andersen will launch a new business-to-business enterprise with financial services company Lend Lease Corp. of Australia and consulting firm ICM Group to capitalize on the services all three companies offer.
Sources at Arthur Andersen said the new ventures were developed in response to an increase in demand for consulting services from Internet companies, primarily e-commerce firms.
"The demand for our services can only be described as extraordinary," said Mathew Verghese, managing director of Arthur Andersen Ventures.
Andersen Consulting, Arthur Andersen's former partner, announced last month it was forming a venture capital division that invests in Internet companies and trades equity stakes in Web startups for Andersen Consulting services.
The Chicago-based firmed dubbed its new enterprise Andersen Consulting Ventures and devoted $1 billion over the next five years.
Arthur Andersen and Andersen Consulting are joined under a corporate umbrella known as Andersen Worldwide, which was formed in 1989 following a reorganization of the business. Under an agreement signed at the time, there is a profit sharing arrangement between the two firms that has resulted in payments by Andersen Consulting to Arthur Andersen in all but one of the years since 1989.
Andersen Consulting, however, charged in its December 1997 arbitration filing that the decision by Arthur Andersen to grow its own management consulting and information technology business is a breach of contract and should negate the need for future payments.
Arbitration is continuing between Andersen Consulting and Arthur Andersen. 
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