Andersen is closing its office in city

Many workers will go to rival Ernst & Young

May 16, 2002|By Meredith Cohn | Meredith Cohn,SUN STAFF

More than 200 employees of Arthur Andersen LLP emptied their desks yesterday as the local office of the embattled company prepared to close its doors permanently and send most of its business and workers to its competitor Ernst & Young LLP. The actions mirror those of at least eight other Andersen offices across the county.

Andersen spokeswoman Jennifer Knepley confirmed the closing yesterday but declined to give any specific information, saying an official announcement would be made today.

Mark S. Bartlett, managing partner at the Baltimore office of fellow Top Five accounting firm Ernst & Young, declined to comment pending today's announcement.

Andersen's high-profile offices in the Power Plant overlooking the Inner Harbor were nearly cleared out by 4 p.m. yesterday, with just a few workers still packing up belongings. A few balloons flew from the windows.

Cordish Co., which developed and manages the Power Plant, said Ernst & Young has arranged to expand space it had previously leased in a new office building next door on Pier 4 to accommodate more workers. It added 11,000 square feet to its 40,000-square-foot commitment, according to Cordish, which is also developing that building.

It wasn't clear what part of the Andersen business Ernst & Young plans to buy or how many employees and partners will move over. Andersen has 10 partners and about 235 workers in the Power Plant.

"This reaffirms the mayor's decision to make a loan to Ernst & Young to stay in the city. They've already expanded," said Allison Parker, a vice president at Cordish. "There should be no problem filling the space Andersen is leaving. It's spectacular; the views are extraordinary. We have a lot of interest in it."

Ernst & Young received a 10-year loan for $850,000 from the city to move to the space and maintain 125 jobs. It converts to a grant if the company employs 150 people by the fifth year of the loan. If the bulk of the Andersen people move over, the local Ernst & Young office could more than double in size.

Andersen has been shedding assets and losing clients nationwide for its role in the Enron Corp. scandal. Andersen is on trial in Houston on federal criminal charges of obstructing justice, and more than 350 U.S. clients have fired Andersen, including 58 in the Standard & Poor's 500 Index.

Officials at the local Andersen office said recently that it had not lost any major clients, but they have said that they laid off an unconfirmed number of workers in the audit division.

It appears that some of Andersen's clients will move to Ernst & Young with the company. Yesterday, Coventry Health Care Inc. announced that it was replacing Andersen with Ernst & Young as its independent auditor in the fiscal quarter that ends June 30. The move was not the result of a disagreement, Coventry said in a statement.

"I would like to thank Arthur Andersen for their professionalism and the high quality of work performed during their tenure with Coventry," said Allen F. Wise, Coventry's president and chief executive.

Local Andersen workers who go to Ernst & Young probably will move to the Blaustein Building at 1 N. Charles St. until the new offices on Pier 4 are completed. Construction has begun.

Andersen has had a presence in Baltimore since 1966. It moved to bigger, industrial-style offices with exposed beams and loft spaces in the Power Plant when that building opened in August 1999. Its name is prominently affixed to the brick exterior.

Cordish said at least a half-dozen other companies have asked about the 40,000 square feet of space since rumors began circulating recently that Andersen would leave. Cordish has shown it to four companies.

Nationally, Anderson has been selling parts of its business.

Last month, the company agreed to sell most of its risk-consulting business to staffing company Robert Half International Inc. As many as 70 partners and 800 employees are expected to transfer.

This month, Andersen signed a letter of intent to sell its consulting units to KPMG Consulting Inc. for $284 million. That deal would affect up to 3,000 U.S. employees.

Ernst & Young has agreed to buy Andersen offices in Nashville, Tenn., Louisville, Ky., Pittsburgh, Detroit and three other Midwest cities. The company also might acquire Andersen offices in Indianapolis, Philadelphia and Washington.

Sun staff writer Andrea Walker and Bloomberg News contributed to this article.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.