Fed chairman heading effort to rescue Andersen names two senior partners to lead transition

<br>NEW YORK (AP) _ Paul Volcker is getting some help in his efforts to pull Arthur Andersen back from the brink. <br><br>The former Federal Reserve chairman, who is in charge of trying to rescue the troubled

Saturday, March 30th 2002, 12:00 am

By: News On 6

NEW YORK (AP) _ Paul Volcker is getting some help in his efforts to pull Arthur Andersen back from the brink.

The former Federal Reserve chairman, who is in charge of trying to rescue the troubled accounting firm, announced Friday that senior partners C.E. Andrews and Larry Rieger will lead the company's transition to a new structure.

The announcement came a day after Andersen said it would embrace Volcker's plans for shaking up the firm, which has been indicted for destroying documents related to its audits of failed energy giant Enron.

The plans include separating the auditing and consulting practices to avoid conflicts of interest. No decision has been made on what to do with the consulting business, where 60 percent of the firm's partners work.

The top ranks of the struggling company were jolted earlier this week when Joseph Berardino resigned as Andersen's global chief executive Tuesday. He has not been replaced.

The U.S. firm is currently being led by managing partner Larry Gorrell and a group within the firm that is representing Andersen in talks with the Justice Department.

Volcker has said the firm will survive the exodus of clients if a number of requirements are met _ including the Justice Department dropping its indictment against Andersen, something the department has indicated it has no plans to do.

Volcker also said progress has been made in talks to settle class-action lawsuits against the firm. But shortly after he made those remarks, a court-appointed mediator in talks between Andersen, Enron and lawyers for employees and shareholders suing both entities released a statement saying that ``serious issues'' remained.

The mediator, Eric D. Green, said he spoke out ``in part to correct any other releases that may have been made by anybody else.''

In his remarks, Volcker also hinted that there might be other changes in senior management. He has wide authority to mandate changes at Andersen under an agreement he reached with the firm in February.

The plan also calls for Volcker to take over the firm and head a seven-member governing board. That step will still occur if the other conditions of Volcker's plan are met, including the end of the legal actions against Andersen by the Justice Department and the Securities and Exchange Commission.

Whatever changes happen, clearly a new Andersen would be considerably smaller than today's firm, which employs 28,000 people in the United States.

Meanwhile, clients continued to flee the firm. Credit reporting agency Equifax, Domino's, the No. 1 pizza delivery company, and Xcel Energy all said Friday that they had switched auditors. Andersen has now lost more than 100 audit clients in recent weeks.