LONDON/NEW YORK -- Andersen said most of its U.S. tax partners would join rival Deloitte & Touche on Thursday, as the world's No. 5 accounting firm, facing a criminal charge for its role in the Enron scandal, headed further toward disintegration.
The move comes as Andersen [ANDR.UL] named a new chief executive for its worldwide operations, which are also splintering as deals hatch with different "Big Five" rivals.
In the U.S., where Andersen is bleeding clients and is expected to cut a quarter of its 28,000 domestic staff next week, Andersen agreed that most of its tax practice partners would join rival Deloitte.
Andersen spokesman Patrick Dorton did not say how many employees would be laid off, but did confirm that job cuts are imminent.
"Given the indictment by the Justice Department of the entire firm, it is inevitable that there will have to be some personnel reductions," he said on Thursday evening.
Andersen has not said how many partners, out of 1,620 in the U.S., work on tax services.
It gave no details of the deal, which it said could close by the end of this month.
Andersen has been looking to split off its U.S. tax and consulting practices in the United States for several weeks, following recommendations by Paul Volcker, who was brought in by Andersen to advise on remodeling the firm in February.
The former Federal Reserve chairman -- who is looking to save the firm by getting the U.S. Justice Department to drop charges against Andersen for shredding Enron-related documents -- recommended splitting off the tax and consulting units from Andersen's core audit unit.
The move is aimed at countering criticism that accountants raking in consulting and tax fees go soft on companies' audits, as many say happened in Andersen's botched audit of Enron Corp.
Andersen's U.S. tax services bring in about $1 billion in revenues a year, according to outside experts. Andersen has about $4.3 billion in annual U.S. revenues, split roughly equally between audit and non-audit services. The non-audit services comprise tax and consulting practices.
New Worldwide CEO
In London, Andersen announced its acting worldwide chief executive would be Europe-based Aldo Cardoso, the front-runner for the job. He replaces U.S.-based Joseph Berardino, who quit last week in a move designed to help the embattled firm survive.
Berardino's resignation followed Andersen's indictment by the U.S. government for its role as auditor to collapsed energy trader Enron Corp..
Cardoso, 46, managing partner for France and also chairman of Andersen Worldwide's board, faces a difficult task trying to salvage Andersen's rapidly fragmenting international network of businesses.
Many experts expect a bankruptcy filing unless Andersen can soon come to a settlement with the U.S. Justice Department over a criminal charge of obstruction of justice for shredding Enron-related documents.
Cardoso takes over after the breakdown of Andersen's global merger talks with KPMG and will now shepherd the various mergers under negotiation between Andersen member firms around the world and the remaining "big four" global accounting groups.
"I will continue to work with our partners around the world to help them achieve as quickly as possible the best outcome for their people and clients," he said in a statement.
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