KPMG and Andersen agree to merge their Irish operations

Partners  in KPMG and Andersen have voted unanimously to merge their Irish operations. The merger will copperfasten KPMG's position as the second-largest accountancy firm in the State, with 66 partners, 1,430 employees and turnover of €144 million.

It catapults the merged firm into the same league as PricewaterhouseCoopers, which still retains its consulting arm, in terms of fee income. It will also bring together Andersen's expertise in the tax area with KPMG's strength in the areas of audit, corporate finance and corporate recovery.

"The combined firm will be a very powerful force in the Irish professional services marketplace," KPMG's managing partner, Mr Jerome Kennedy, said.

"By combining the strengths of both firms in terms of the quality of our people, the exceptionally high service levels and outstanding business solutions for our clients, we believe that this merged firm can offer major benefits to both our clients and our people," added Mr Kennedy, who will head the merged entity.

Andersen's managing partner, Mr Roddy Ryan, welcomed the decision but announced his decision to stand down after seven years in the post. He will join the board of Glen Dimplex as an executive director.

"I am delighted that our two firms with outstanding people and proven strengths have agreed to combine their operations," he said.

The merger, which was agreed after weeks of negotiations between senior partners from both firms, is subject to certain conditions including regulatory clearance.

Staff at both firms were notified yesterday, following approval of the merger by the partners. The move will not lead to any job losses. "We are looking to grow the firm, not cut jobs," a spokesman said.

The link-up comes as leading European members of Andersen, the embattled former auditor of Enron, try to distance themselves from the criminal indictment and litigation facing the firm in the United States.

Previous attempts to merge the global partnership with Big Five rivals Ernst & Young and Deloitte & Touche Tohmatsu proved unsuccessful.

As a result, Andersen's international firms have been breaking apart and tying up with rivals in recent weeks as the US parent firm fights to stave off collapse.

Earlier this month, the British branch of Andersen agreed a tie-up with Deloitte & Touche and announced job cuts of up to 1,500 jobs.

Andersen partners in the Netherlands, Sweden and Italy also favoured links with Deloitte & Touche while Andersen's operations in Germany and Central Europe plumped for Ernst & Young.

In Hong Kong and China, the Andersen practices have been absorbed by PricewaterhouseCoopers while in Japan and South Africa, they have linked up with KPMG. Although the situation remains fluid, Ireland is the only Andersen practice in Europe to date to announce a tie-up with KPMG.

The US Justice Department has rejected an offer from Andersen to settle an obstruction of justice charge arising from the Enron collapse, the firm has announced. Mr Rusty Hardin, attorney for the Chicago-based firm, said, "they just rejected it out of hand".

Faced with a May 6th trial on the criminal charge stemming from Andersen's role in the collapse of Enron, the firm proposed on Wednesday a last ditch offer to settle with the government. "Now we just continue to prepare for trial. I don't think there's anything left to talk to the government about," Mr Hardin said. - (Reuters)