Can the Arthur Andersen Brand Rise from Enron's Ashes?

Some brands are purported to be 'teflon,' nothing bad ever sticks to them. Apple and GE come to mind.

Some brands, however, are synonymous with rotten behavior, though it is arguably the case that in the eyes of many, getting caught is the real crime.

The biggest of the big accounting firms was always Arthur Andersen. Not always in size, though that was frequently the case, but in reputation for relentless pursuit of business and ruthless dedication to its clients' interests. Clients appreciate service providers who will stop at nothing to defend them. It makes business easier - and it gives them implicit deniability if they cross any lines. But eventually - and infamously - Andersen was so fanatical in its pursuit of Enron's interests, with which it felt its own were entwined, that it ended up participating in and then revealing a fraud of such scope that it still defines the notion of unacceptable corporate performance.

Both Enron and Andersen paid the ultimate price: what is politely called 'loss of public confidence,' which means that they were both forced to shut down. And so, for the past dozen years they have remained a cautionary tale, a corporate bogey-man trotted out whenever someone wanted to make a point about what not to do.

But there were always a cadre of true believers who thought that Andersen represented what was good and great in the business of accounting and consulting. Who thought that the verdict was grossly unfair and far too harsh. So, as the following article explains, a firm of former Andersen accountants is now attempting to revive the name. They think there is still equity in that brand, that there are clients who yearn for what they believe it represented, as the following article explains. And they are quite possibly correct in that. The question is whether those are clients that any service business really wants to have. JL

Michael Rapoport reports in the Wall Street Journal:

"There's no name that better captures our values."

Accounting firm Arthur Andersen collapsed more than a decade ago in the wake of the Enron Corp. scandal, but a group of former Andersen partners are convinced there's still gold in the Andersen name.

A San Francisco-based tax-consulting firm run by former Andersen partners is buying the rights to the Andersen name and plans to rename the firm Andersen Tax. The move was announced late Monday, after The Wall Street Journal reported the name change.

The former Andersen partners are betting the 12 years since the accounting firm's demise have helped wash away any taint associated with Enron, and that the century-old Andersen name will have connotations more positive than negative to potential clients.

Former Andersen employees "have been going around with a scarlet letter 'A,' " says Mark Vorsatz, the former Andersen partner leading the charge. "We're going to make that A stand for Andersen."

Andersen, Enron's auditor, destroyed documents after the government began investigating the energy company's accounting. That led to the 2002 obstruction-of-justice indictment and conviction that doomed the firm. The U.S. Supreme Court overturned the conviction in 2005, but by that time Andersen had long since surrendered its licenses to practice and wound down its operations.

Mr. Vorsatz's tax firm is changing its name from the less memorable moniker WTAS LLC, short for Wealth & Tax Advisory Services. Twenty-three Andersen partners, including Mr. Vorsatz, formed WTAS in the wake of Andersen's collapse.

The firm is now the 16th-largest tax-advisory practice in the U.S., according to 2014 rankings from Accounting Today magazine. It is one of the biggest tax-only firms, although it is far outstripped by the tax practices of the Big Four accounting firms—PricewaterhouseCoopers LLP, Deloitte LLP, KPMG LLP and Ernst & Young LLP.

Mr. Vorsatz, WTAS's chief executive, argues that a tax-only Andersen firm—with none of the auditing of corporate books that helped get the original Andersen into trouble—could pose a competitive challenge to the Big Four in the tax-advice business. He projects WTAS's global revenue will be more than $200 million this year, up from $149 million last year, in part due to expansion internationally, and reach $275 million to $300 million in 2015.

WTAS is acquiring the rights to the Andersen name from Arthur Andersen LLP, the surviving entity that holds the remnants of the former Andersen business. Terms of the deal weren't disclosed.

"The partners have totally embraced the concept," says Mr. Vorsatz, 59 years old, who worked at Andersen for 23 years. "People are genuinely excited about it."

Still, the move is a gamble. While Andersen had "a lot of very talented people," whether significant business value remains in the Andersen name is "a bigger stretch," says Joseph Carcello, a University of Tennessee accounting professor, speaking generally and not about the WTAS deal in particular. Critics of Andersen at the time of the Enron scandal noted that the firm had had other problem audits in addition to Enron, at companies such as Sunbeam Corp. and Waste Management Inc.

"I'm not going to defend the indefensible," Mr. Vorsatz says of the Enron affair. But the actions that brought down Andersen, he said, were the responsibility of "a handful of people. That was not representative of the rest of the firm."

Stefan Widmer, a partner at PrimeTax, a WTAS affiliate in Zurich, said the change will be "a great thing" for the firm. Europeans view Enron as "a U.S.-particular incident," said Mr. Widmer, who is also a former Andersen partner. "People were startled in Europe that a company of that size could go down for the actions of a few individuals."

Mr. Vorsatz points out that other big accounting firms have had major blowups since Enron, and he says the new Andersen "will not have any U.S. audit practice at all, ever."

Scandal or no, Mr. Vorsatz says he remains proud of the Andersen name and the values of quality, stewardship and client service he says it stood for.

Andersen's alumni "maintain a strong identification with the name and a great deal of pride for what it was," says Duane Kullberg, Andersen's chief executive in the 1980s, who says he strongly supports Mr. Vorsatz's move.

Jeff Dinsmore, a former Andersen colleague of Mr. Vorsatz and now a client of WTAS, says he got "pretty emotional" when Mr. Vorsatz told him about the planned name change. "If anybody can pull it off, it's going to be Mark," says Mr. Dinsmore, now at the MacNaughton Group, a Honolulu real-estate development firm.

In a survey conducted for WTAS of corporate executives who make tax decisions, large majorities of the respondents—many of whom were themselves former Andersen employees—had favorable opinions of Andersen, and said they would be more likely to work with a firm akin to WTAS if it changed its name to Andersen. (WTAS says the respondents were randomly selected, and the number of ex-Andersen employees indicates how widespread they are in the finance industry.)

WTAS started with a focus on tax planning for wealthy clients, but the company has since branched out to offer corporate, state and local, and international tax services. It was the firm's recent expansion outside the U.S. that prompted the name change, Mr. Vorsatz said; trademark restrictions prevent the firm from using the WTAS name in Europe.

"I suggested to one of my partners, 'What do you think about using the name Andersen?' " The response, says Mr. Vorsatz: "That's a pretty bold idea."

But, he says, "there's no name that better captures our values."