(By Jack Bigelow) I was scanning my emailed Washington Post Headlines when an article by Drew Harwell grabbed my attention. It was titled, “Tarnished by the Enron scandal, can this brand be saved?” Whoa! Having been a part of Andersen for more than 27 years, I knew that this was Big News. And it was: It told about a west coast tax firm, WTAS, formed by a group of former Andersen partners, which had become an “international tax giant” and was now changing its name to AndersenTax. The article described the change as a high-profile bet on this question: “Just how toxic can an international brand become – and still be saved?”

Toxic? Well, maybe. But thousands of alumni like me will tell you that the toxicity was neither the brand nor the “crop” of us comprising this formerly esteemed organization. The downfall of Andersen was to me the result of a perfect storm of factors that in the aggregate, began to converge three weeks after my retirement and doomed the organization. It was like watching an elegant vessel that I had helped to construct go to the bottom of the sea with many of my friends aboard.

Andersen was never accused of fraud in the Enron case. It was indicted and convicted (a conviction later overturned by the U.S. Supreme Court) of obstructing justice by destroying documents as the Enron investigation was starting. The book, A.B.C.s of Behavioral Forensics (Wiley, 2013), examines fraud cases from the viewpoint of what motivates individuals (bad apples), organizations (bad bushels) or cultures (bad crops) to commit or abet fraud. I’d like to apply the “crop” factor to the non-fraudulent downfall of Andersen. Andersen was a culture as much as it was an organization.

How can we tell when a good crop might be beginning to turn bad? For me, it was when it appeared that the luster of some of Andersen’s fundamental values was beginning to move to other values. Every professional firm struggles with tensions between its role as a public servant and its role as a business. When I started, the Andersen value structure emphasized its responsibility to the investing public. The business side was downplayed, inside and outside. (The term, “Marketing” was banned from the Andersen lexicon.) By the mid-1990s, I could see that the emphasis had switched to our performance as a business. (Andersen now had an official Marketing function.) Whether this change was justified by a competitive environment is a separate issue. But it was a change that I noticed and I found it troubling.
As I see it, this very fundamental shift in the value structure rippled down through the organization in many ways that contributed to the perfect storm. A book would be required for a complete analysis; here are just a few examples:

• To reduce costs, Andersen reduced the infrastructure in the primary office serving Enron—some of those released were those who routinely saw to the destruction of documents no longer needed. Now, old documents piled up and became a source of panic when the investigation started. (Note this, those of you who see infrastructure costs as overhead expense, rather than an investment to keep your organization out of trouble.)
• Rainmakers reigned and success (including promotion within the management structure) was measured by profitability more than the oft-proclaimed value of stewardship.
• Quality review controls were—according to some reports at the time—disregarded in the case of Enron, a highly prized client generating lots of extra billable work.
• Those expressing concern about these changes were viewed as being out of sync with the times. Others, I am sure, remained silent but concerned.
• The motto, “Think Straight-Talk Straight” morphed into “Helping our clients succeed.”
• Major partner meetings began to take on the appearance of rallies, (in one instance, a key leader walked on stage, leading a tiger to the tune of “Eye of the Tiger”).
I believe numerous outside factors were also at work in the perfect storm downfall of Andersen. One example: Enron leadership was very chummy with the White House at the time, and I suspect that the federal government’s zeal in prosecuting Andersen was not incoincidental with that relationship.
If I were to summarize the values shift that I saw, it would be a change from asking, in any situation, “What is the right way to do this?” to asking, “What’s the most cost-effective way to do this?” Indeed, the first approach is what attracted me to Andersen in the first place.
So, what happened with the crop? I suggest that the Andersen crop was still an excellent crop, but the values driving the standards of that crop did change. Standards influence behaviors and all the rippling changes from the heavy emphasis on business success ultimately tarnished the brand. Can the brand be restored? The partners of WTAS believe that the bloom can come back and reseed the once-pristine Andersen reputation. I, and, I am sure, many of my former Andersen family members certainly hope so.

Join us for more insights into behavioral forensics (behind fraud and similar white collar crimes) from the authors of ABCs of Behavioral Forensics (Wiley, 2013): Sri Ramamoorti, Ph. D., Daven Morrison, M.D., and Joe Koletar, D.P.A., along with Vic Hartman, J.D.  These distinguished experts come from the disciplines of psychology, medicine, accounting, law, and law enforcement to explain and prevent fraud.  Because we are inspired to bring to light and address the fraud problems in today’s headlines, we encourage our readers to come back and revisit us regularly at BringingFreudtoFraud.com.