The Big Five may soon be the Big Four regardless of what happens in the legal system: Arthur Andersen has lost a bevy of major clients as a result of the Enron debacle,
including Sara Lee, Merck, Freddie Mac, FedEx, Delta Airlines and Valero Energy. The companies have fled the accounting giant in recent weeks, taking with them long-term business
(Freddie Mac, for example, had been with Andersen for 32 years).
It's no surprise clients are concerned. But the change in firms has given rise to a variety of new questions for corporate communicators to tackle.
Most former clients have issued quiet press releases, announcing they have hired a new auditor and couching the news that they have terminated their relationship with Andersen
within that announcement. They shy away from linking the change to the Enron scandal.
Julie Ketay, director of corporate media relations for Sara Lee, offers a familiar explanation: "The bottom line reason is that it became clear that their viability as an audit
firm was in jeopardy." Like execs with other companies that have ended their association with Andersen, Ketay emphasizes that the work done for her organization was of the highest
caliber: "We have the highest respect for the people we worked with [at Arthur Andersen]. We had to make the decision that was best for our shareholders."
But other companies admit that defending their reputation was an issue. "For the sake of our credibility, we have to watch theirs," says Mary Rose Brown, SVP of corporate
communications for Valero.
Some PR pros believe many clients would have done just as well to stay with Andersen if reputation was at stake. "I, as an in-house PR person, would turn into the devil's
advocate and say, 'Why are we making the change?'" says Lee Duffey, president of Duffey Communications in Atlanta. "Are they doing it because they're running scared or because
there's a legitimate business reason to do so?"
Duffey says companies in the energy industry may be justified in worrying about their reputations if they remain associated with the accounting firm. "[Changing auditors] might
be a deterrent to future litigation."
But most companies are jumping ship "because people are just worried about the taint of the Enron thing," says Lowell Robinson, former senior EVP and CFO for HotJobs.com, which
was recently sold to Yahoo! for $5.5 billion. "Changing accounting firms is a very big thing," he says, and is not a decision to be made as a knee-jerk response to a media feeding
frenzy.
Duffey also warns that a change of audit firms not backed by sound motivations could draw unwanted attention to former clients. "I think it makes the company leadership look
questionable to investors. You're going to call unnecessary attention to yourself."
Sara Lee's Ketay, however, says she has received little media attention. "We've had a few calls. But the story is not us. The story is the Big Five and Arthur Andersen."
(Ketay: 312/558-8727; Brown: [email protected]; Duffey: 404/266-2600; Robinson: [email protected])