NEW YORK (CNN/Money) -
Arthur Andersen plans to cut 6,000 jobs next week, a person familiar with the plan said Friday, as the accounting firm struggled to settle the government's charge that Andersen obstructed justice by shredding Enron Corp. documents.
Rusty Hardin, the lawyer leading the defense team for Andersen, said both sides met in Washington Friday to hash out a settlement. "We've been talking to the government and that's all we're going to say," Hardin said in Washington, according to Reuters news agency.
A Justice Department official said Andersen requested the meeting and prosecutors were willing to listen. There was no word on whether the sides plan to meet again soon, but sources said informal talks will continue. Andersen had asked for a quick trial on the criminal charge, and one is set to begin May 6 in Houston.
The government indicted Andersen March 14 for alleged obstruction of justice after it shredded Enron-related documents days after it learned of a federal investigation. Since then, Andersen has lost about 130 clients and now is considering a public admission of responsibility for destroying the Enron documents. But the company said it would not plead guilty in a courtroom.
Meanwhile, a source close to Andersen said more than 6,000 Andersen employees will lose their jobs, and that the cuts could come as soon as Monday.
"Given the decision by the Justice Department to indict the entire 26,000-person firm, it is invertible there will be some personnel cuts," another person close to Chicago-based Andersen said. Andersen had about 85,000 worldwide workers -- including 28,000 in the United States -- before its partners overseas started leaving for rival firms and its clients began a mass exodus earlier this year.
Andersen's list of former clients grew as Starwood Hotels and Resorts, Quadramed, Rush Enterprises, Genuity, Valero LP, Fleet Enterprises, KeySpan, and Houston Exploration all dropped the troubled firm Friday.
Separately Friday, American National Insurance Co., which says it lost $20 million on Enron stock and commercial paper, filed a motion for a temporary injunction in the civil suit against Enron and Andersen in Houston.
The injunction would prevent Andersen from selling assets and releasing foreign affiliates from obligations to the partnership.
"The beef is that if Andersen dissipates all valuable assets, there will be nothing left in the corporation to which any of the claimants will be able to attach," Andy Mycelia of law firm Griever Herz & Adams, which represents American National, told CNNfn. "Before they consummate any transactions, they need to bring it to the attention of the court and decide if it's fair for everybody. We should know what the terms are."
Houston Civil Court Judge Melinda Harmon has scheduled a hearing on the motion for Monday.
Meanwhile, Andersen's Middle East partners have agreed to combine their practices with PricewaterhouseCoopers. "My partners and I are tremendously excited by the prospects of joining with PricewaterhouseCoopers," Andersen's Middle East managing partner Fouad Alaeddin said.
The news comes a day after the lead plaintiff suing Enron Corp. and Arthur Andersen said it would expand its lawsuit to add key Wall Street firms such as J.P. Morgan Chase (JPM: up $0.42 to $34.86, Research, Estimates), Citigroup (C: up $0.02 to $48.67, Research, Estimates) and Credit Suisse First Boston as defendants, according to people familiar with the litigation.
The University of California, the lead plaintiff in the Enron shareholders' class-action lawsuit, will file an amended complaint in federal court Monday, attorneys familiar with the case said. CIBC World Markets, Merrill Lynch and Lehman Bros. also will be named, these people said.
The lawsuit will allege that some of the banks helped Enron structure its off-the-books partnerships while also lending money to the now-bankrupt energy trader. Details
Also Thursday, Andersen agreed to sell part of its tax and auditing practices to rival Big 5 firms Deloitte & Touche and KPMG.
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Andersen said Thursday it signed a memorandum of understanding for a significant number of its U.S. tax partners and tax professionals to join Deloitte. Specifics will be refined during a review period but the deal is expected to close as early as April 30, Andersen said. Details
Separately, accounting firm KPMG LLP also signed an agreement with Andersen to acquire about 440 partners and staff with auditing and tax backgrounds in Seattle, Portland, Ore.; Salt Lake City; Boise, Idaho; San Francisco; Los Angeles: and possibly Boston, according to an internal e-mail sent to KPMG partners Thursday night.
The sale of part of the U.S. tax practice comes as Andersen Worldwide SC, the umbrella firm that controls Andersen member firms around the world, appointed Aldo Cardoso acting CEO.
Cardoso succeeds Joseph Berardino, who resigned last month after the accounting firm was indicted for allegedly obstructing justice when it shredded Enron Corp. documents.
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