Andersen Infighting Shatters Jim Wadias Dream

Bang in the middle of a battle royale raging at the $9.5 billion global consultancy and accounting giant Andersen Worldwide, high-flying Indian executive Jim Wadia finds himself at the losers end.

Wadia, 49, who was nominated to take over as Anderson Worldwides chief executive last month, fell victim to a fierce power struggle between the firms consultants and accountants, as he failed to drum up the requisite two-thirds majority in a worldwide vote of the companys partners.

In what has been the first time ever that a person nominated has failed to get the mandatory majority to win, Wadia born in India and educated in Switzerland received the nod for the top job from most of Andersen Worldwides 2,700 partners but fell short of the magic two-thirds majority.

 

Had he won, Wadia the managing partner of Arthur Andersen in the UK since 1993 would have been the first non-American to head the organisation which was founded in 1913 in Chicago.

The chief of Andersen Consulting, George Shaheen, has now been nominated for the chief executives job. The results of the ballot are likely to be in by end-June.

Observers, however, say that the controversial Shaheen too is unlikely to get a two-thirds majority. A company spokesman refused to comment on what would happen if Shaheen failed to secure the majority.

At present the company is divided into two wings. The accounting wing known as Arthur Andersen and the consultancy known as Andersen Consulting. Andersen Consulting, which was formed after a restructuring in 1989, is now a $5.3 billion giant that has outstripped the accounting wing in earnings. The fallout being that the consultants are now demanding big changes in the way Andersen Worldwide is run.

A showdown between the accountants and the consultants was sorted out amicably in Paris in April. Ironically, at the time Wadia who observers say is known for a relaxed style of management was a key player in hammering out a compromise between the two groups.

The row between the accountants and the consultants is also over money. The revenues from Andersen Consulting helps to ensure that all Andersen Worldwides partners earn $1 million a year and it has been the contention of the consultants they are subsidising the accountancy wing partners.

Shaheen, meanwhile, has pushed for big changes in the way Andersen Worldwide is run. The consultancy wing pulled in revenues of $5.3 billion this year and the hard-driving Shaheen wants to touch $8 billion by 2000 AD.

Among the suggestions put up by Shaheen is that Andersen Consulting be spun off as a separate company and floated on the stock market. He has also criticised Arthur Andersen for starting its own consultancy division which competes with Andersen Consulting.

Observers hold that Wadia was a widely acceptable compromise candidate and that Shaheen will have a tough time garnering the necessary votes for the top job.

Theres no telling which way the cookie will finally crumble. If Shaheen does pull it off then kudos to him, if he cannot then the writing is on the wall: the conflict in the company is set to continue for some time.