As the Andersen accounting firm continues its effort to strike a deal with the Justice Department to settle an obstruction of justice charge, the fallout of the Enron Corp. scandal is eliminating the longstanding professional training group at Andersen’s huge St. Charles facility.
As part of the 7,000 jobs Andersen recently said it would cut, an estimated 500 will be in the firm’s widely respected learning group, which has responsibility for in-house training.
For the firm to survive given the disintegration of its overseas network, substantial loss of major clients and dwindling new business, Andersen is cutting back the scope of its operations. This in effect means that its learning group has been axed, according to sources close to the beleaguered Chicago-based accounting firm.
“Andersen’s worldwide training organization is being shut down,” one Andersen executive said Monday. “This was announced by firm leadership Thursday, April 11th, at the end of business. This will involve the layoff of all of the nearly 500 global training professionals.”
Sources at the campus had feared that the firm’s restructuring could have a dramatic impact on its training facility, but few suspected Andersen would ditch the function altogether.
The firm is thought to be looking at several alternative uses for the college-style St. Charles campus, which will remain open but with a “drastically” scaled down staff. All that now keeps the facility open is a contract to train employees for Accenture Ltd., formerly Andersen Consulting until the two firms split at the end of 2000.
At the time of the divorce, Accenture struck a five-year deal to train some of its 60,000 employees at the site, which it said recently it planned to continue and for which it pays an estimated $50 million annually, according to one source.
The St. Charles training center has been the envy of the industry for its rigorous classes and professional atmosphere. Andersen bought the former home of a Catholic women’s college north of downtown St. Charles in 1970 to use as its Center for Professional Education.
After an $80 million expansion in the late 1980s, the 150-acre campus can accommodate 1,675 guests. Andersen spends about $240 million, or 6 percent of its U.S. revenue, on training, much of which went to finance the St. Charles campus.
Andersen sources at the campus said the firm has looked at a possible sale of the site, which is now valued in excess of $120 million. But potential buyers are hard to identify at present.
Andersen executives are said to be still formulating a long-term plan for the site, given its scale and the current Accenture services agreement. The firm is also looking at opt-out clauses for lease agreements for three nearby office blocks, which are now unlikely to be required for support and training staff.
Meanwhile Monday, Andersen’s lawyers continued to negotiate with the Justice Department in an effort to work out a resolution of the department’s obstruction case on terms the firm can accept.
And Andersen partners were expected Monday to agree formally to the dismissal of David Duncan, the partner in charge of the Enron audit team. Duncan’s decision last week to plead guilty to an obstruction of justice charge and agree to help federal prosecutors in their case against Andersen led the firm to rush to complete his dismissal.
Andersen had said Jan. 15 that it would dismiss Duncan for ordering the shredding of thousands of Enron-related documents. But the firm did not canvass its 1,700 partners, which is required as part of the complex dismissal process, until Wednesday, the day after Duncan pleaded guilty to a single felony charge.
Andersen spokesman Patrick Dorton said he did not have the results of the partnership vote, but it was expected to be overwhelmingly in favor of Duncan’s dismissal, given his admission that he tried to stall a government probe and his deal with federal prosecutors.
The completion of the vote among Andersen’s U.S. partners came as another piece of the firm’s network overseas broke away.
The Baltic affiliates of Andersen Worldwide have signed a memorandum of understanding with Ernst & Young to merge their operations, the accounting firms said Monday.
The merger follows similar moves in several other countries and regions. The merged company will keep the Ernst & Young name and will have about 250 employees and annual revenue of about $10 million.
