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Arthur Andersen agreed April 4 to turn its tax business over to Deloitte & Touche, the firm’s first U.S. divestiture since the Enron Corp. scandal erupted last fall. Terms were not disclosed. Chicago-based Arthur Andersen, the U.S. arm of Andersen Worldwide SC, said it had signed a memorandum of understanding under which a “significant” number of Andersen’s tax partners and other employees would join Deloitte. Last month, former Federal Reserve Chairman Paul Volcker recommended splitting Andersen’s tax and consulting businesses from the firm’s audit practice. Andersen said it plans to retain some tax professionals, who will assist it with its audit business. “This transaction is fully consistent with our commitment to move quickly on the Andersen reforms initiated by Mr. Volcker,” Larry Gorrell, managing partner of Arthur Andersen, said in a statement. Andersen plans to close the deal by April 30, although details of the transaction must still be worked out. But the transaction, which is likely to take the form of an asset sale, will have to be carefully structured to insulate Deloitte from legal liability connected to Andersen’s role in the Enron collapse. Andersen was Enron’s auditor and has been indicted by the federal government for allegedly shredding documents requested by the Securities and Exchange Commission during an investigation of the company. “The risk to Deloitte of buying a piece of Andersen is sort of an entire order of magnitude less than buying most or all of it,” said John Coates, a professor at Harvard Law School. Deloitte could require Andersen to put proceeds from the sale into escrow, drawing on the account only to settle claims. Such an arrangement would protect Deloitte from Enron-related claims even if Andersen files for bankruptcy. Andersen has hired New York’s Gleacher & Co. for restructuring advice. Copyright (c)2002 TDD, LLC. All rights reserved.

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