Andersen Seeks Hong Kong Partner

by Mary Swire, Tax-News.com, Hong Kong

18 March 2002

After the US Justice Department indicted Arthur Andersen LLP on a count of obstruction of justice, described by the firm's lawyer as a 'corporate death warrant',
the managing partner of the Hong Kong office, Allan Aw, distanced the local firm and its partners from the US charge.

"There is no direct relationship between the two of us. There is no ownership relationship. Arthur Andersen Hong Kong is completely owned by local partners," Mr Aw said, claiming that, to the best of his understanding, the international partners in the Hong Kong firm - members of Andersen Worldwide Societe Co-operative - were not exposed to fallout from the criminal charge or from any future civil charges relating to the Enron controversy.

By the weekend, KPMG was the last of the big four accounting firms in global merger talks with Arthur Andersen, but Mr Aw said Arthur Andersen's Hong Kong branch would be able to merge locally with any of the other big four firms.

"While globally the mergers with other firms have collapsed if you like, at the local level we are actively seeking a very strong partner who would make us a very strong local firm going forward," he said.

Mr Aw said that if his firm broke away from Andersen Worldwide, then it would be an amicable split. "In the short term it will affect us in the sense that we will lose the multinational clients that Andersen has, to the extent that we will lose the referral work from Andersen," he said.

A number of Andersen's major Hong Kong clients have said that they are reviewing Andersen's audit engagement, but that no decisions have yet been made on the issue. Mr Aw said the firm had not lost any local clients, and that staff were also remaining loyal to the firm.

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