Everyone knows that the great accountancy houses, 'the Big Six', as they used to be called, wield the most astonishing power in the business world and the economy. Not so many know how much power they wield over the Government. The story of Arthur Andersen, and its burgeoning power, is especially interesting.
Arthur Andersen is a proud survivor of the stampede of top accountancy firms to sue each other for alleged negligence in auditing and handling the accounts of clients who had gone bust in the recession of the early 1990s. Over the Barlow Clowes fiasco, the Government, represented by Ernst and Young, sued Touche Ross; over BCCI, Touche Ross sued Ernst and Young and Price Waterhouse. Over Atlantic Computers, Price Waterhouse sued Touche Ross. Over Wallace Smith, KPMG sued Coopers and Lybrand. Over London United Investments, Price Waterhouse sued KPMG. Over Polly Peck, Touche Ross sued Coopers and Lybrand. Poor Coopers and Lybrand was in the soup more than once over its not altogether distinguished accountancy of the Maxwell empire. It was sued on behalf of Maxwell companies and pensioners by a string of accountants, including the receivers for the fat man's bust businesses, Arthur Andersen. Most of these cases were 'settled' in deals whose terms became increasingly inaccessible as the accountancy firms swallowed each other up. Price Waterhouse swallowed Coopers and Lybrand, Touche Ross became Deloitte and Touche, and so on. Though it still features in unhappy headlines, as in coverage of their audit of the exorbitant expenditure of company money by the former chief executive of the Tomkins conglomerate, Arthur Andersen did not take over any major accountancy firm, nor was it taken over. Its current annual fee revenue is more than seven billion dollars. It was assisted into the big time by its consulting arm Andersen Consulting, whose current annual revenue is more than eight billion dollars.
LRB 2 November 2000 | PDF Download