Compliance June 3, 2004

Retired Andersen Partner Expands Lawsuit Scope

March 18, 2003 (PLANSPONSOR.com) - A closely watched lawsuit expected to test the legal liability limits for firms gobbling up parts of Arthur Andersen LLP's business last year now names Andersen's management team and other partners as defendants.
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Former Andersen partner Gilbert Viets amended the lawsuit first filed last year in an Indiana state superior court, according to a Wall Street Journal report. The suit alleges that the defendants conspired to sell Andersen’s assets on the cheap. The complaint points the finger of blame at a defendant “class” – all Andersen partners as of January 2002.

Blair Fensterstock, a lawyer representing Viets, said partners along with management and other firms, “looted” Andersen’s assets “and left the corpse for the retired partners.”

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Originally named as defendants were:

  • Deloitte & Touche LLP
  • Ernst & Young LLP
  • Grant Thornton LLP
  • KPMG LLP
  • BearingPoint Inc., formerly KPMG Consulting Inc.
  • PricewaterhouseCoopers LLP.

Viets, a 35-year Andersen veteran, is seeking class-action status on behalf of roughly 250 former partners. He is asking for compensatory damages in excess of $200 million to cover lost retirement payments and punitive damages exceeding $400 million, according to the latest complaint.

Other firms picked up Andersen partners and clients last year as the company collapsed – an early Enron scandal casualty. Andersen suffered from a dwindling pool of assets after its March 2002 indictment and later conviction, on a criminal-obstruction-of-justice charge, which triggered a torrent of client losses. The conviction effectively put Andersen out of business.

An Andersen spokesman told the Journal that Viets’ case has “no merit,” adding “we are disappointed that a retired Andersen partner would make these kinds of false allegations.” Andersen is appealing its criminal conviction.

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