UK partners of Andersen, the accounting firm hit by the Enron scandal, stand to benefit from a payment in the tens of millions of pounds from Deloitte & Touche, the rival with which it reached an agreement in April to buy some of the firm’s assets.
Deloitte UK is set to complete a de facto takeover of Andersen’s UK operations on July 31. The move will include a transfer of 230 partners and 3,300 staff. Deloitte will also be paying the UK partnership for certain other assets, including computers.
When questioned as to the value of the payment, John Connolly, Deloitte’s UK chief executive, stated that it would be the book value of the assets, thus making it in the region of several tens of millions of pounds. Furthermore, the payment would be going straight to UK partnership that owns those assets.
It is likely that Deloitte’s payment to the UK partnership will be seized on by former employees and investors in Enron, who have been seeking compensation for their financial losses and have pledged that they will seek compensation from Andersen’s partners around the world. Andersen’s US partnership was convicting of obstructing investigations into Enron, whose auditor it was at the time. This has led to the collapse of the accountancy firm on a global basis.
Once outstanding liabilities have been addressed, the UK partnership will be wound up. Any remaining funds will be divided amongst those partners who put capital into the business, numbering 383 at the time the agreement was reached with Deloitte.
Despite the Enron scandal, insiders have confirmed that the UK partnership was well-capitalized, and financially healthy. Most high profile audit clients were retained, including Cadbury Schweppes, the soft drinks manufacturer, and WPP, the world’s largest advertising business.
Some partners however do not expect to get back all the capital that they had invested, and expectations of anyone making a profit are low.