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Andersen to cut 7,000 jobs in US

Arthur Andersen said on Monday it would cut 7,000 jobs, or just over a quarter of its US staff, as the embattled auditor begins to crumble under the weight of problems caused by its role in the Enron Corp scandal.

Facing a dwindling client base, a criminal indictment and a multi-billion dollar shareholder lawsuit in the United States, -- Andersen said it would cut 7,000 jobs from its 26,000 total in the US over the next few months. The firm's global network has already been in the process of breaking up.

The US job cuts, chiefly at its audit practice and administrative services unit, have been expected for several weeks.

The cuts come as Andersen tries to reach a settlement with the U.S. Justice Department over a charge that the firm obstructed justice by destroying Enron-related documents. The firm was also named on Monday in an extended class-action lawsuit brought by empty-handed Enron shareholders.

More than 100 of Andersen's clients have jumped ship in the past few months, concerned about problems facing Andersen, cutting into the accountant's $4.3 billion revenues in the US.

The move comes as Andersen is splintering in the United States, after several weeks of overseas operations agreeing to join rival firms.

Following a plan devised by Federal Reserve former chairman Paul Volcker, called in by the firm to pull it out of the crisis, Andersen is planning to split off its US tax and consulting units from its audit practice. Andersen said last week that it would sell most of its US tax practice to rival Deloitte & Touche.

"Of all the issues we have confronted recently, none compare to actions we are now forced to take with our employees," said Larry Gorrell, managing partner of the firm's US operations, in a statement.

"We still have a lot of important work to do," said Gorrell, "We remain focused on our efforts to reform and rebuild Andersen, while at the same time providing exceptional service to our clients."

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