Calling from Japan, where KPMG is sewing up a deal with Andersen’s Japanese practice, senior partner Mike Rake said: ‘We were unable to reach agreement on something that was acceptable to both sides and I wish the Andersen partners well.’
But it is understood KPMG could not arrive at a situation that would protect KPMG.
Rake always maintained that he would not sign a deal that exposed KPMG’s clients, people and business to any legal liabilities if Andersen were not able to contain legal action against itself and its partners to the US.
He was also adamant that the firm would stick to its principles, and that it would not do anything that would diminish the firm’s reputation.
So while Rake was jetting around the world helping to salvage what was once billed as a global merger, it was perhaps ironic that he would have passed a herd of Deloitte partners bound for Heathrow on Tuesday – they had been summoned to vote on the proposed deal with Andersen.
It seems odd that Deloitte was able to structure the deal so that its partners in the UK felt comfortable over the liability issue.
Deloitte’s senior partner John Connolly, who had spent the Easter weekend faxing questions to Andersen, has a background in corporate finance and so should know a thing or two about structuring a deal.
But so has John Griffith-Jones, KPMG’s new chief operating officer in the UK and one of the corporate finance partners working on the UK deal.
One was convinced, the other still needed to be convinced – but Andersen was convinced it needed to do the deal quickly, sensed KPMG still had doubts and jumped into the arms of Deloitte.
There were mutterings at KPMG that other firms were desperate to stop the global deal with Andersen.
After the fanfare of the announcement that the two firms were going to get together, the other firms, two of which had initially looked at a global deal but walked away, started a guerrilla war, picking off firms wherever they could.
But Rake would have also had another front to fight on – his own partners.
Sources close to the firm said there was unease among some divisions, notably in tax, which suggested the possibility that Andersen in the UK could have been divided up between several firms – Deloitte had already signed up Andersen’s tax practice in the US.
But in the end, Deloitte won all the spoils of victory in the UK, and there would have been a number of relieved partners in Salisbury Square as well as on the Strand.
Now Rake is valiantly trying to keep other deals on track, notably in France, Germany and the Netherlands. But with first Spain and now the UK falling to Deloitte, it is difficult to see other European Andersen practices go elsewhere.
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