NEW YORK (CNN/Money) -
Paul Volcker, the former Federal Reserve chairman brought in to help Arthur Andersen recover from its Enron Corp. accounting crisis, is running out of patience with the firm and may step away.
Volcker is apparently frustrated with Andersen's failure to secure a settlement with the Department of Justice last week. A settlement in that case, plus settlements in other Enron-related cases against Andersen, was a pre-condition for Volcker's continued work with the firm.
"We have set out a number of conditions that would dictate what we could or could not do," a spokesman for Volcker said. "At this point, those conditions have not been met. We can always look for miracles."
If Volcker departs it would heighten the crisis for the embattled accounting firm, which has suffered a mass exodus of clients and partners since early this year. The firm is currently charged with one count of obstruction of justice in the Enron investigation and faces trial May 6.
John C. "Jack" Bogle, the founder of Vanguard Funds who would be on the proposed Andersen Governing Board with Volcker, said the former Fed chief is "frustrated."
Bogle said Volcker is a man "who does not like a lot of baloney or delay," and he is unable to proceed unless Andersen and Justice can reach a compromise.
Separately, David Duncan, a former Andersen partner who pleaded guilty to obstruction of justice in relation to destroying Enron accounting documents, told government officials that members of the firm became worried about Enron in August, indicating the company knew about the problems even further back than previously thought, the New York Times reported Monday.
Duncan said the accounting firm had formed a group to investigate the bankrupt energy trader's finances and that ultimately the decision to destroy documents came from that investigation, according to the report.
The prosecution is said to believe that Duncan's testimony is evidence of a "collective knowledge" of the Enron issues and the destruction of documents among Andersen as a firm, not just among select individuals, the report said.
"David Duncan is continuing his cooperation with government prosecutors and he intends to live up to the letter and spirit of that agreement," Duncan attorney Sam Seymour told CNNfn.
Also Monday, a source close to the negotiations between Andersen and the Securities and Exchange Commission told CNNfn that broad terms of a settlement between the two parties have been reached. But, the source said the possible settlement has been put on hold pending the outcome of negotiations between Andersen and the U.S. Justice Department, who broke off talks late last week.
The source also said Andersen could pay from $100 million to $250 million in penalties into an investor-restitution fund. Other terms of the possible settlement with the SEC came from reforms suggested by Volcker that were released to the public in March, according to the source.
Meanwhile, the Swedish and Dutch arms of Andersen reported separately Monday that each would merge with their local arms of Deloitte & Touche. The Danish unit also said it would join forces with Deloitte.