Arthur Andersen took the unprecedented step this week of hitting back at claims it abused obligations to sister firm Andersen Consulting.
Jim Wadia, head of Arthur Andersen Worldwide, dismissed allegations the accounting arm had used pooled fees and poached staff to start a rival consulting business.
He also argued Andersen Consulting would pay dearly before it could leave the network of professional services firms that operate under the Andersen name.
Wadia spoke to Accountancy Age following revelations of the detailed claim lodged by Consulting with the International Chambers of Commerce in Paris.
Consulting is seeking compensation for a series of alleged abuses that also include Arthurs’ trading on its reputation and ‘mischaracterising’ its business to potential clients.
In December, Consulting asked the ICC to arbitrate to resolve the differences with an accompanying claim for $400m (#247m). The compensation claim is roughly equal to the income paid from Consulting to Arthur Andersen since 1989, when Consulting was created.
Wadia said discussion of the allegations had forced him to make his first public defence of Arthur’s conduct. He said he would be rebutting every claim, issuing counter allegations and counter claims.
‘Let’s be clear about this, our contractual obligations, which were created in 1979 and reconfirmed in 1989, have three provisions requiring departing member firms to pay 150% of net revenues, return the Andersen name and return the Andersen technology.’
He said it had grown rich on the back of efforts by accounting partners going back decades. He added the consulting business run by Arthurs was fundamentally different.
Vernon Ellis, head of Consulting’s European business, said the firm wanted to stay in the Andersen network, but the 1989 agreement could not cope with the complexity of relationships in the organisation.
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