No Accounting for Waste

The Arthur Andersen shredding scandal hits home for thousands of employees and families.

by Trish Boppert

Few, if any, of the hundreds of participants in last week’s Arthur Andersen pep rally in Love Park appeared ready to set aside the message that all is, if not well, at least in fighting form in the land of the Big Five accounting firm. Some 900 Philadelphia-based Andersen employees were hurled astride an out-of-control tiger when news of mass document shredding in the firm’s Enron-affiliated Houston office broke in January. The Philadelphia rally, one of several held nationwide, was designed to protest the criminal indictment of Arthur Andersen that followed the Enron scandal and its potentially catastrophic effect on its employees.

At the rally, employees garbed in Andersen orange T-shirts expressed shock that thousands of documents related to Enron's audit were destroyed in the firm's Houston offices. They were livid about being tarred with the same brush of indictment for the actions of a few, and they were vocally loyal to Arthur Andersen.

"I came to support my company, and I think Arthur Andersen will survive, hopefully as Arthur Andersen," said Chris Rocca, of the firm's manager-valuation group, taking a break from roaring his approval at the comments of the rally speakers, who were all Andersen employees.

(The ground thrummed with appreciative foot-stomping when one speaker announced that she worked for Arthur Andersen, her husband worked for Arthur Andersen and she was also expecting a baby.)

"I love Arthur Andersen. As a human, and as an employee, it has helped me grow," said events planner Al Fuchs.

Away from the rally tumult, employees are resigned to changes on the horizon. "You know the stages of grief?" asks a member of the firm's support staff who asked not to be identified. "The first stage is denial, and that's what I think a lot of people are in now. Next comes starting to feel scared, upset and bummed out, which is where I definitely am right now. I think the company as a whole is still in fighting mode, but privately, among themselves, people are getting their resumés together and talking to headhunters."

Ann J. Reilly, wife of retired Arthur Andersen partner T.J. Reilly, is realistic. "Let's face it," she said, "the European and Asian parts of the company may be gone. It would be lovely if the Justice Department would just withdraw the indictment, but..."

Former Federal Reserve Chairman Paul Volcker, hired by the firm to create and present a plan for the firm's survival, is hoping to persuade the Justice Department to dismiss the indictment and cap Andersen's financial liabilities. Many experts consider it a long shot. Meanwhile, Arthur Andersen clients are jumping ship daily, and overseas merger talks have faltered.

"Who will suffer if Andersen fails?" asks Reilly. "The impact on Philadelphia alone will be immense. Hundreds will be out of work here, thousands and thousands worldwide. All for the actions of a few."

She notes that should Andersen go bankrupt, she and her husband would stand to "lose a chunk of change, which my husband worked very, very hard for, but our lifestyles would not change considerably. We're in far better shape than the young partners, the rest of the employees and the families who count on them."

She's not kidding. Partners, who become owners of the business and receive shares of the overall profits, are required to put $50,000 to $250,000 into the firm annually. Most take out loans to do so. The hundreds in Philadelphia whose futures are in limbo include support staff whose years with one firm may be meaningless in the context of a tight job market.

"In the mid-Atlantic region, I'd say there about 50 young partners," says a Philly-based manager who requested anonymity. Having worked at Arthur Andersen for close to 10 years, he says that he "did have the goal of becoming partner," a golden ring he is today relieved remained elusive.

According to the anonymous support staffer, Arthur Andersen is working hard to rally the troops for what may be its last stand. "We have what they call å meetings' every time a new development happens," she says, and the staff is "bombarded with e-mails from execs about contacting senators, congressmen, the president. We're encouraged to send e-mails, faxes and make calls." Which at least some are doing, she says, by personalizing form letters in a room set aside for that purpose.

Despite these efforts, she says, "it surprises me that employees think we're going to make it, or at least are saying we will. It's like they're angry at Enron, angry at the Department of Justice, but still loyal to Arthur Andersen."

"This is such a well-run organization with such high ideals," she says wistfully, "but now we wonder how it was allowed to happen. ... Do they really let big companies like Enron do things and look the other way?"

Rocca sounds like someone whose belief system has flickered but not yet gone out. "No one is going to come right out and say that we'll be fine and this will all go away," he notes, "but at the same time, we have faith that, in some altered fashion, things will go on."

Although Arthur Andersen the corporate entity is immune from employee anger, to many, David Duncan, the Houston-based partner fired for his role in the destruction of Enron documents, is fair game.

"He's not exactly high on my list of people to meet," says Rocca. If he could ask Duncan anything it would be this: "Why? Why did you put the firm and its employees in this position?"

That's the million-dollar question employees hope will be answered in Andersen's favor. In the meantime, they fill in the blanks as best they can.

"If there were questions about the integrity of a client then he [Duncan] should have asked them," says Ann Reilly.

"The firm was very strong on enforcing its policies," says a manager, "and it should never have happened in the first place. This was a renegade employee who went out and shredded documents."

How much of what is Arthur Andersen will survive remains to be seen. Layoff rumors abound, spread by last week's New York Post report of 6,000 jobs on the chopping block. "Even though employees in Philadelphia are petrified," says Ann Reilly, "they still want to believe in Arthur Andersen and in their office being there. That's how much this company, this family, and it is like a family, means to its employees."

And, says the support staffer, "despite it all, it's somehow still business as usual. It may sound trite, but this is a corporate culture that puts its clients first, and everyone in Philadelphia is still working as hard as possible to do that."