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More Andersen units sign up with rival auditors

The breakup of embattled auditor Andersen continued on Tuesday as its Malaysian arm agreed to link up with rival Ernst & Young, while its Italian unit said it planned to merge with Deloitte & Touche.

Andersen's Malaysian affiliate and Ernst & Young said they had agreed to combine their Malaysian practices under the Ernst & Young name as market leader, giving E&Y another piece of the US accounting firm's Southeast Asian network.

In Italy Andersen and Deloitte & Touche said they had given their managers a mandate to draw up a merger contract, though any deal has to be approved by antitrust authorities.

The moves came a day after Andersen, indicted for its role as auditor to collapsed US energy trader Enron, said it hired a top restructuring and bankruptcy specialist amid doubts over how it will emerge from the crisis.

The firm is scheduled to go on trial in the United States on May 6 to face a criminal obstruction of justice charge. Since being charged in early March, Andersen has lost hundreds of clients and its overseas business has broken apart, with units linking up with competitors.

PACT BY JUNE 30?

In Malaysia, E&Y signed a memorandum of understanding with Andersen affiliate Hanafiah Raslan & Mohamad (HRM) setting out the terms of the merger.

"The memorandum envisages that definite agreements are to follow to create a market leader in Malaysia," it said.

The enlarged firm will have over 2,500 employees and will provide assurance and advisory business services, tax and corporate finance services, it said.

An industry source said the expanded entity, with 15 offices nationwide, would serve about 36 per cent of the more than 800 firms listed on the Kuala Lumpur Stock Exchange.

Andersen managing partner Wong Kang Hwee, in a note to his staff obtained by Reuters, said both firms hoped to conclude a final merger pact before June 30. His counterparts in Singapore, Australia and New Zealand have also signed up with E&Y.

Sources told Reuters in London earlier on Tuesday that Andersen's partnership in the Philippines had also signed an agreement to merge with E&Y, one of the remaining big four global accounting firms.

Deloitte & Touche Italia chairman Giulio Uboldi said a merger with Andersen had strategic advantages. "All our clients will benefit from increased services. Both companies have top class professionals and this will offer greater opportunities for the development of our personnel and our business."

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