Ernst & Young Global Chief Executive Bill Kimsey was in Malaysia yesterday for talks aimed at snaring the local affiliate of Arthur Andersen and keeping his reeling rival's network intact in Southeast Asia.
After talks with Andersen units in Manila and Jakarta, and following the agreement of Singapore to merge, Ernst & Young looks set to become the biggest auditor in the region.
The firm lost out to rivals in Hong Kong, China and Taiwan.
"Having the top man going to the ground level means Ernst & Young is marketing itself better," said Sebastian Chong, an associate professor of accounting at the National University of Singapore.
"No professional firm can afford to wait for business to come to them."
Andersen in the US is struggling to survive lawsuits and client defections over its role as auditor to failed Enron Corp.
Outside the US, the No. 5 firm has effectively collapsed as affiliates abandoned a merger with KPMG and defected to rivals.
Deloitte Touch Tohmatsu LLP picked up Andersen's Taiwan unit on Thursday, after earlier sealing the UK, Spain, Mexico and Brazil divisions.
Andersen's Middle East network went to world No. 1 PricewaterhouseCoopers LLP, which also won China and Hong Kong.
Ernst & Young has taken over affiliates in Australia and New Zealand, Chile, Norway and Russia.
Andersen in Japan and South Korea are yet to announce a decision. Korea recently said it intended to join World No. 3 KPMG, which Thursday won over South Africa.
It also has an agreement to merge with Andersen in Thailand.
Kimsey will fly on to Bangkok, according to officials at Andersen and Ernst & Young, who declined to be identified.
The officials said his visit was not connected to the merger talks elsewhere.
Kimsey had talks in Jakarta on Thursday with John Prasetio, Andersen managing partner for the Asia Pacific and head of Indonesian affiliate Prasetio Utomo & Co.
He was scheduled to meet Andersen Malaysia Chairman Zainal Abidin Putih and Managing Partner Wong Kang Hwee yesterday, according to the officials.
"The meeting with Kimsey was to discuss whether a fast-track merger plan is possible," Prasetio said.
"In Indonesia, Prasetio & Utomo has strong recognition as a brand name and Ernst & Young has global name recognition.
"It will be quite a strong combination."
Prasetio confirmed Kimsey's talks with Andersen partners in Kuala Lumpur and Manila this week.
In related news, prosecutors planned to send as early as yesterday lawyers for Arthur Andersen LLP a proposal for the accounting firm to admit illegal conduct and avoid trial for destroying Enron Corp documents, a person familiar with the case said.
Andersen, its options dwindling after former partner David Duncan pleaded guilty to obstructing justice, may bow to prosecutors' demands to accept responsibility for the illegal shredding, legal experts said.
The No. 5 US accounting firm is under indictment for allegedly destroying evidence of accounting fraud at Enron, which sought protection from creditors Dec. 2 in the biggest US bankruptcy.
Admitting wrongdoing would be a reversal for Andersen, which has denied responsibility for the shredding and blamed a handful of employees.
"While the indictment of Andersen put the company into intensive care, the Duncan plea put them on life support," said Robert A. Mintz, a former federal prosecutor now with the law firm McCarter & English in Newark, New Jersey.
"They must cut a deal if they have any hope at all of surviving," Mintz said.
US Justice Department spokesman Bryan Sierra declined to comment.
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