Ernst & Young clears out the attic after merger

By IRENE CHAPPLE and REUTERS

More than 60 staff lost their jobs yesterday as a result of Ernst & Young's merger with troubled accounting firm Andersen.

Ernst & Young chairman Rob McLeod said the 63 redundancies, including about 20 professional staff, were a result of job duplication after the firms merged in March.

No partners were made redundant.

He said the losses were greater than expected, after natural attrition from the merger had not been as high as expected.

Both Ernst & Young and former Andersen employees lost their jobs after a selection process based on merit, said McLeod. He would not comment on redundancy payouts, but said the employees were given the best package by each firm.

Ernst & Young, which merged with Andersen after the smaller firm's withdrawal from its international network, is forecasting revenue of more than $120 million. It is the second-ranked of the "big four" accounting firms in New Zealand, behind PricewaterhouseCoopers, and employs 810 people in its Auckland and Wellington offices.

Globally, Ernst & Young has said it expects to boost revenues by US$2 billion ($4.47 billion) a year as it hammers out deals with Andersen across the globe.

Its revenue over the past year was about US$10 billion.

Incoming Ernst & Young global chief executive Rick Bobrow said the group had reached about 30 deals to merge or link with Andersen units and was still "very hopeful" about agreements for India and Indonesia.



As well as its New Zealand deals, Andersen has made deals in Australia, Germany, Russia, France, Argentina and Central Europe, and expects to finalise most by June 30, Bobrow said.

Australia's consumer watchdog has yet to approve Ernst & Young's merger with Andersen in Australia, creating a combined business with 5000 staff and 300 partners.

Partners will vote on the Australian deal on May 16.

Andersen has been linking with its rivals outside the United States as it fights to survive after indictment over its role as auditor for collapsed energy trader Enron.

In the United States, Ernst & Young has grabbed 35 to 45 per cent of major corporates which decided to jump ship after Andersen's role in the Enron debacle came to light.