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Accountants vs. consultants
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January 20, 1998: 9:45 a.m. ET
Battle between Andersen partners intensifies with accountants' demands
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NEW YORK (CNNfn) - Accountants at Andersen Worldwide want the management consulting side of the business to pay roughly $10 billion and return their invaluable brand name in order to split up the partnership.
The latest retort likely will translate to a protracted legal battle between the two entities, with partners from Arthur Andersen taking the offensive.
The partners of Andersen Consulting, the world's largest consulting group, voted to break away from Arthur Andersen in December, capping a turbulent nine-year marriage under the same organizational umbrella.
Andersen Consulting alleged "serious breaches of contract and irreconcilable differences" when it filed to seek arbitration with the International Chamber of Commerce in Paris to resolve the dispute.
Arthur Andersen had until this week to respond to the allegations but will file to extend the response period.
The payout demanded is equivalent to 150 percent of Andersen Consulting's fiscal 1997 revenue. Under terms of the current contract, any entity leaving must pay the penalty to the remaining firm. In addition, Arthur Andersen is seeking damages for equity that is being lost and the technology created jointly for both companies.
But, Andersen Consulting argues, the contractual obligations were invalidated when Arthur Andersen breached the contract.
"Any assertions that the provision would even come into play is something I believe that Andersen is putting forward to distract from the core issue -- that they breached the contract by getting into consulting," Jon Conahan, managing partner for strategy at Andersen Consulting, told the Associated Press.
Arthur Andersen and Andersen Consulting were set up as two stand-alone business units as part of a 1989 restructuring. Andersen Worldwide's primary mission was to provide coordination between the two units and ensure they continued to operate cooperatively and compatibly.
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