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The last gasp at Andersen

Arthur Andersen, the auditor, had by the fall of 1940 made enough of a mark on the accounting profession that Arthur Andersen, the founder, was moved to issue a two-paragraph office memo referencing the “enhanced reputation of the firm.”

Bare of self-congratulation, it got right to the point. “In my opinion, there is no more perishable commodity than reputation,” Mr. Andersen wrote.

“Let us continue to function in a spirit of humility and generous service to society. Let us also continue to realize that honesty and frankness still prevail and that deception and intrigue lead to destruction.”

Many, many years later — but sooner than anyone imagined — his admonition proved to be a premonition.

Andersen vanished in 2002, dead at 89 as an obstructer of justice. Indicted in March, the firm was convicted and out of business as an auditor of publicly held clients less than six months later. Its reputation — and thus, it — disappeared that quickly.

Andersen's downfall had all the makings of a compelling human drama, not just Chicago's top business story of the year: 85,000 displaced employees worldwide; shell-shocked, floundering management; another hole in the city's corporate headquarters base.

The Andersen saga more than fulfilled another news requirement: the element of surprise.

Not even word, in February, that Andersen had shredded Enron Corp.-related documents could shake the faith of Eden Martin, an Andersen alum whose Chicago-based law firm, Sidley Austin Brown & Wood, retains close ties to Andersen.

“Arthur will survive and be healthy and fine,” he said. “Litigation is part of the professional (services) environment.”

After the downfall of Andersen and client Enron, the environment for professional services and for corporate governance itself would not be the same.

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