Mark Oshnock remembers the whispers in the airport when an elderly couple saw the Arthur Andersen tag on his briefcase.
Those were the darkest days, when the accounting firm’s collapse and the scandal surrounding its biggest client — Enron — shook confidence in Corporate America.
This week, 11 years after Andersen’s accounting business was mortally wounded by the scandal, thousands of alumni will gather for reunions in Atlanta and 11 other cities to mark the 100th anniversary of the company’s founding.
For former employees like Oshnock — the vast majority of whom had no ties to Enron — it’s a chance to remember the good times.
“Arthur Andersen is clearly in my resume. It’s a big part of my life and my career,” said the 25-year Andersen veteran, now CEO of Visiting Nurse Health System.
Many other Andersen alums are executives or directors at companies in Atlanta and around the country.
The centennial is also a chance to reflect on the firm — both as the former gold standard in accounting and as a company that lost its way, business ethicists say.
Andersen audited not only Enron, but WorldCom, another boom-and-bust firm whose demise roiled the financial world.
Atlanta was one of Andersen’s top offices, with more than 2,000 employees at its peak. The company once employed 85,000 worldwide.
Many in Atlanta joined other firms when clients started to flee, and especially after the U.S. Department of Justice won a criminal conviction of the company in the wake of the Enron fraud.
Andersen’s conviction was later overturned by the U.S. Supreme Court, but by then the firm was gutted.
“It’s not a Scarlet Letter,” said Joel Koblentz, founder of the Koblentz Group, an Atlanta headhunting firm. Former employees, he said, haven’t been tainted by the acts of “rogue” actors that sullied a once-trusted institution.
Warren Turner, a Dunwoody resident who worked in the technology and small business auditing practice at Andersen from 1985 to 1993, started the Andersen Alumni Association in 2001 after missing a reunion held a few years before the firm’s collapse. He started with a website, and the group now publishes a quarterly newsletter and directory of thousands of ex-Andersen employees.
The organization will hold reunions on Thursday in 12 cities, including one at the InterContinental Buckhead. The association has become a deep referral network for talent, said Turner, who runs the metro Atlanta consulting firm Cardinal Points Group.
Took the risk
Andersen, founded in Chicago in 1913, was respected for its focus on independence and loyalty to its clients’ shareholders, not executives. The firm’s namesake and founder is credited with helping shape accounting as a profession of trust and public service.
But critics say that in the firm’s last two decades audits became less stringent as it courted lucrative consulting work from some of the same clients. A schism within Andersen resulted in the spin-off of what is now the consulting giant Accenture, but the original auditing firm continued to push heavily into consulting.
Like some of its rivals, Andersen let the allure of the consulting side gradually weaken the independence of its auditors, said John Hooker, a professor of ethics at the Tepper School of Business at Carnegie Mellon University in Pittsburgh.
The firm’s work for WorldCom finances prior to its 2000 accounting scandal amounted to “the world’s worst audit,” said Dennis Beresford, an executive-in-residence in the accounting program at the University of Georgia.
Beresford has first-hand knowledge: He joined WorldCom’s board of directors in the wake of the scandal, in which insiders inflated WorldCom assets by $11 billion to hold up the stock value.
Accounting scandals plagued many notable public companies in the early 2000s, not just ones audited by Andersen. The turmoil resulted in thousands of lost jobs, several high-profile corporate bankruptcies and billions of dollars in losses to investors. The incidences also ushered in new accounting rules.
At Enron, an accounting shell game obscured billions of dollars in losses. Several executives went to prison.
Andersen was convicted of obstruction of justice after employees in several offices shredded Enron documents. On appeal, the U.S. Supreme Court found fault in the jury instructions in the trial, and concluded there needed to be proof Andersen executives were conscious of wrongdoing in ordering documents shredded.
Despite the victory on appeal, the case destroyed Andersen as an accounting business. Today, Andersen still exists but only as a holding company that operates a convention and training center in Illinois.
Hooker said that Andersen employees have some justification for feeling railroaded. Other steps potentially could have been taken to punish the firm while keeping its accounting business alive.
“It’s conceivable the firm could have cleaned itself up,” he said.
Beresford said many Andersen employees and managers were high-caliber people, but the firm was ruined by the acts a few.
“It was a great firm while it lived and had a terrific reputation,” he said. “But it lost its priorities a little bit and paid a very, very, very steep price for doing so.”
Oshnock, the former health care consulting chief, joined Andersen in 1977. He started auditing in the manufacturing division with clients across the Southeast and eventually made partner before joining the fledging health care consulting division.
When the accounting crises started, Oshnock said, the firm scrambled to hold on to clients and also rallied to try to find a place to land for auditors, consultants and their staffs. His team ended up joining KPMG.
His unit had no involvement with Enron, WorldCom or any other scandal. Yet the taint was felt across the company. The day at the airport, Oshnock recalled, he heard the elderly couple on an airport escalator whispering that he was a “shredder” as they noted his Andersen baggage tag.
“The 2000-plus people in Atlanta were scratching their heads thinking: ‘What happened?’” he said.
About 100 former Atlanta Andersen partners and their spouses still gather for a dinner every spring, Oshnock said, and he sees former colleagues around town. Andersen experience is still a selling point, he said.
Susan Klopper, who spent about 18 years with Andersen in the firm’s Atlanta corporate library, stayed until getting laid off in July 2002, after the corporate conviction. But she continued to come to her office in the Georgia-Pacific tower downtown about once a week for a few months to help auditors and overseas employees who needed help with research.
“The company wasn’t what was being represented in the press,” she said.
Klopper is now executive director of the Goizueta Business School Library at Emory University. She salvaged volumes on taxes and other information from the Andersen library, and they are now at Emory. For years, she also kept in her home a large Andersen sign that once greeted visitors near the Andersen office’s main reception desk.
Despite landing sqaurely on her feet, Klopper says Andersen’s meltdown was “devastating.”
“I had been there for 18 years,” she said, “and felt sure I would have retired from there.”
Arthur Andersen Atlanta reunion
When: Thursday, Sept. 26, 6-10 p.m.
Where: InterContinental Buckhead
For more information and to register: http://andersenalumniatlanta.eventbrite.com/