Comment: Deloitte – Andersen’s dark horse

Deloitte watched from the sidelines as KPMG announced it would seek to merge with Enron’s former auditor and then stood quietly by as first Ernst & Young and then PricewaterhouseCoopers picked up practices. First PwC announced it had picked up the choice Hong Kong and China practices of Andersen and then Ernst & Young confirmed it was merging with Andersen in Russia and Australia.

E&Y continued acquiring: New Zealand was next with Singapore swiftly joining its burgeoning empire.

Deloitte entered the fray last Monday, picking up the Spanish practice of Andersen. This was a crucial stumbling block to the KPMG deal. Not only was this the withdrawal of the first European practice from the KPMG tie-up, Spain was a market where Andersen was the number one firm and a crucial gateway to South America.

Deloitte proved how true that was yesterday by confirming that it would merge Mexico: others in the region are expected to follow.

The Big Five map is now being redrawn worldwide. In the UK the Deloitte-Andersen tie-up moves Deloitte up to number two in the league table. It’s a bitter irony: had KPMG pulled off the Andersen deal it would have been breathing down the neck of PwC. Now istead of jostling for the number one slot, it sees itself slip to number three.

But a question remains. Andersen in the UK has been named in the US indictment. Should there be action against the firm as a result, has Deloitte sifficiently ring-fenced the potential liability?

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