Life after Andersen

Baylor Business Review, Spring 2003 by Elmore, Barbara

A Baylor University graduate who spent more than three decades with Arthur Andersen LLP remembers a newspaper story that called the company "the Marine Corps of accounting."

Employees liked the description even though the writer probably meant it as derogatory, said Phil Wedemeyer, Baylor graduate and former Andersen audit partner. It implied a professionalism about the company that Wedcmeyer remains proud of despite the Enron-tainted scandal that decimated the company last year.

"Some folks thought we were arrogant, but we were very sold on our professionalism," said Wedemeyer, who retired Aug. 31, 2002.

The 89-year-old Arthur Andersen firm was convicted June 15, 2002, of obstructing the Securities and Exchange Commission's investigation of energy trader Enron. At issue was auditor David Duncan's instructions to his staff to destroy Enron documents. In August, the state revoked the company's operating license, and in October, a federal judge fined Andersen $500,000 and sentenced the company to five years of probation. The company once had 85,000 workers and thousands of clients.

Baylor alumni Brett Treadwell, an 11-year Andersen employee, said his reaction at hearing the company linked to Enron's problems was likely the same as that of most employees.

"I was thinking it was a big problem, but not one we can't get over," Treadwell said. He believed Andersen possessed "the wherewithal to get through the issue."

Then the story about document destruction emerged. "We knew that was going to be much harder to get over. Even then, we didn't expect an indictment against the whole firm," said Treadwell. The government's announcement March 14, 2002, of the indictment was the end, he said. "Even if we had survived the trial and not been convicted, it didn't matter. Once we got indicted our clients had to leave us. After that it was all over."

Treadwell and Wedemeyer are only two of the scores of Baylor graduates Andersen hired over the years, sometimes snagging them well before graduation. Wedemeyer, who spent the bulk of his Andersen years in the company's Houston office, graduated from Baylor May 1971 and started at Andersen the following month. He became a partner in September 1980.

Walter Plumhoff was "the start of it," said Wedemeyer. He graduated from Baylor in 1938 and got a master's at Northwestern.

"He took a personal interest in coming back to campus. It was a time when none of the firms did a lot of campus recruiting. he recruited the guys who made the next tier."

Other names roll off Wedemeyer's lips as he recites the history between the two institutions: Vernon Garrett, Harold Cunningham, Don Baker, Dave Ewing. "For a lot of years, we were the largest single employer of people coming out of Baylor. I felt, and students felt, that if you could, you wanted to work for Arthur Andersen."

Wedemeyer's frequent use of the word "we" as he talks about Andersen is intentional, and he makes 110 apologies for the company.

"I don't know that I'll ever stop doing it," he said about linking himself to the company. "I don't plan to. I'm not any less proud of our firm than I was before all this happened. I now understand that the rest of the world doesn't look at it that way."

Because his views may not mesh with those of Andersen outsiders, Wedemeyer doesn't discuss the events that led to the company's demise. "People who know me know that I personally would not do those kinds of things - would not do them," said Wedemeyer. "That helps me get along."

He and other ex-employees use the same words when they talk about their former company: professionalism, commitment, training, community service.

"I'm still as proud of Andersen as I always was," said Treadwell, who now works at PricewaterhouseCoopers. "I've had numerous partners at PWC tell me that they cannot believe the good things they were hearing about Andersen people when they went to our clients to get the work when Andersen was going away." Clients talked about the respect they had for Andersen employees, their responsiveness and their integrity, said Treadwell.

Accounting scandals at Enron and telecom giant WorldCom, another Andersen client, made people think there was "something wrong at Andersen," he added. "But at the end of the day, it isn't auditors that make companies come down. I know that we did good work."

Jason Woodbury graduated from Baylor in 1994, then got his MBA in 1998, going to work in Andersen's Dallas office in September 1998 as a business consultant. Hc, too, noted that the people he worked with showed personal and professional integrity and said an "overzealous justice department" felt pressure from the American public to act, using Andersen as an example of what it could do to other companies. "I think that Arthur Andersen was maybe some low-hanging fruit and was an easy one to go after," Woodbury said.

He works at Lucidity Consulting in the strategic finance solutions group. The job is similar to what he was doing at Andersen, and he is working with about 10 of the same people he worked with there, starting a new group "from scratch."