CHICAGO – Arthur Andersen chief executive Joseph Berardino resigned Tuesday, bowing to mounting pressure resulting from the accounting firm's role in the Enron scandal.
"While my nature is to keep fighting to protect our people and our clients, the fact is that the improper shredding of documents took place on my watch — and I believe it is now in the best interests of the firm for me to step down from the CEO position," Berardino said in a statement.
The 30-year company veteran said he would remain in charge until a successor is chosen as managing partner and CEO of Andersen Worldwide, which includes Arthur Andersen LLP, the firm's U.S. business.
The announcement came four days after former Federal Reserve Chairman Paul Volcker urged top management to step aside so he can install and head an independent board in a last-ditch plan to save the company.
Berardino, 52, said staying on as CEO could hinder Volcker's effort.
In an interview on CNN, where he first disclosed his resignation, Berardino said his 89-year-old company "is in deep stress."
Andersen was charged with obstruction of justice two weeks ago by a federal grand jury, the first indictment returned since Enron filed for the largest bankruptcy in U.S. history. Andersen audited the energy giant's books for 16 years.
Andersen pleaded innocent to destroying Enron-related documents and computer files. Company officials have blamed employees at its Houston office for any problems.
The firm has lost more than 70 clients this year and overseas affiliates have been bolting to rival firms. Industry experts are doubtful whether anything can prevent the firm from folding.
Volcker was tapped last month to head a committee charged with making sweeping reforms at the company. He has said a cap must be placed on Andersen's financial liability from the Enron scandal if it is to survive.
The key element of his plan is the dismissal of the indictment, but the Justice Department has not said whether it would consider such a move.
Volcker praised Berardino's work to encourage needed reforms.
"I well understand that, after devoting his working life to Arthur Andersen, he feels his resignation as chief executive will help clear the air and facilitate the recovery of Arthur Andersen under fresh management," Volcker said.
Andersen's 1,700 U.S. partners had been urging Berardino to resign, according to several partners interviewed Tuesday. One of them, Kathy Scherer of Chicago, said the resignation may be "the only way that the Justice Department might ease up" on Andersen.
Others acknowledged regret at his departure.
"Joe Berardino has led this firm well, with integrity and courage, through the most difficult period in its history," said Aldo Cardoso, chairman of the Andersen Worldwide board of partners.
Berardino, who has been with the firm since 1972, was managing partner for its assurance and business advisory practice in North America before taking the top job 14 months ago.
Berardino said a new U.S. management team is working on a plan that will be disclosed in the next few days. Asked in his televised interview about the possibility of bankruptcy, he said: "Clearly, that has to be included as an alternative, but it's certainly not where we want to go."
Andersen suffered another blow Tuesday as the Securities and Exchange Commission said in a court filing that the company was involved in a scheme that allowed former executives of Waste Management Inc. to inflate earnings by $1.7 billion.
Last year, Andersen paid a $7 million fine to settle an SEC suit accusing it of issuing false and misleading audit reports that inflated Waste Management's earnings from 1993 to 1996.
Andersen employs 85,000 people in 84 countries, including 28,000 in the United States.