Arthur Andersen: Begging for Business

Enron employees thought they had it bad. But imagine being an Arthur Andersen partner trying to persuade accounting clients to stick with an outfit that used to be your typical boring Big Five firm, but is now known for Enron, document shredding and former partner David Duncan's taking the Fifth at televised congressional hearings. And then there's the news. Last week three of Andersen's most prestigious auditing clients--Merck, Delta Air Lines and Freddie Mac--told the company to take a hike. Andersen paid more than $200 million to settle claims against it by an Arizona charity, and it's running around trying to settle its Enronitis problems for $1 billion or so. Rumors of shredding-related criminal indictments and plea bargains are rampant.

So what do you say to Andersen clients to try to stop them from joining the ever-longer list of ex-clients? As luck would have it, NEWSWEEK knows: we've gotten a copy of a presentation that Andersen is currently making to corporate boards. We didn't see the show--we're not that wired--but the presentation is revealing.

The fortysomething-page package, with highly confidential printed on each page, claims that news accounts have exaggerated Andersen's role in Enron's collapse. (You know what those newsies are like.) Andersen blames Enron officials, Enron's board of directors, investment banks, credit-rating agencies and the Securities and Exchange Commission. In the best "mistakes were made" tradition, Andersen says, "We will acknowledge errors in judgment and have done so." Not exactly the same as "we're sorry" or "we screwed up, but we promise not to do it again." But maybe those wouldn't look good in PowerPoint.

Andersen invokes the weather defense: "This is our 100-year flood--an extraordinary and unusual set of events." And the "everyone else sucks" defense. Andersen says it had a 21 percent market share of Big Five accounting clients but accounted for only 15 percent of the financial restatements from 1997 through 2000. The Enron restatement was in 2001. Maybe it and Andersen's other recent disaster, Global Crossing, will be in the updated versions.

The real question about Andersen these days is whether it will survive in anything like its current form. It's all well and good to hire the sainted Paul Volcker to be a public symbol of rectitude, but how do you deal with the drain of customers, partners and bright young talent? Not to mention the financial hits? The last page of the Andersen package, which purports to address the perception that "Andersen will not survive," says: "What we know for a fact is that we are a strong and financially healthy firm and that we intend to learn from this experience and be better for it." Not exactly Churchillian. Then again, what do you expect from accountants?


But this doesn't mean that Beijing and Taipei are finally singing to one tune. China's "smile offensive" stems in part from its desire to draw Taiwan into the mainland's economic orbit--primarily through direct sea, air and postal connections. Even more important, Beijing is eager to avoid anything that might complicate its leadership transition. Within the next year, nearly half of China's political leaders--including President Jiang Zemin--are slated to step down from key posts.

What could force a frown is the U.S. relationship with Taiwan. Last week Washington announced that Taiwan's Defense Minister Tang Yiau-ming would be granted a visa to visit the United States, in contrast with past policy. Tang may meet with U.S. Deputy Defense Secretary Paul Wolfowitz in Florida this week. And next month the Pentagon will make its annual decision on U.S. arms sales to Taiwan. Already Beijing has loudly demanded an end to all U.S.-Taiwanese military ties and dialogue--familiar words that could soon drown out all the sweet talk.


Oops... They Did It Again

KENTUCKY CATNAP: The lines sure moved fast at the airport in Louisville, Kentucky, on Feb. 20--because a security screener fell asleep. A thousand happy passengers slipped on by, but were soon back to their disgruntled selves when authorities awoke the napper and sent them all through again.
MILE-HIGH MATES: Two men, constantly ducking into the bathroom together--they must be terrorists! At least, so assumed the crew of a recent flight from London to New York. Within minutes, two Air Force jets scrambled to escort the plane home. As it turns out, the men weren't terrorists--just a lascivious gay couple.
THUMBS DOWN: Do air marshals really make a difference? When one passenger disobeyed a flight attendant on a Los Angeles-Salt Lake City flight by leaving his seat, an air marshal who had seen the culprit give the thumbs up to another passenger put two and two together--and made five. All the passengers were forced to keep their hands on their heads until landing. Come on, guys. Just because the "thumbs up" means "up yours" in many parts of the world...
HIGH-JACKING? Who could confuse Osama bin Laden with a deceased Ethiopian emperor? A flight attendant on JMC Airlines, that's who. The stewardess on a London-to-Spain flight accosted two passengers when she confused the man adorning their T shirts, Jah Ras Tafari Haile Selassie I, with bin Laden. The angry Rastas were ordered off the plane before takeoff, after allegedly inflaming the situation with a hostile reaction to the flight attendant. Who can blame them--first the no smoking rule, now this?


Take This Job And Shove It!

We're becoming a much more violent culture. Employees are getting fired and coming back and shooting their human-resources officer. In the 1940s they would jump off of buildings or go and drink heavily.
How can design help?
If you fire somebody you should have good access control--a perimeter fence, door controls, locks with ID-card access. So when that employee packs up their stuff, you say, "Here's your two weeks' paycheck, take your stuff, bye-bye, have a nice life," and they can't get back in to assault somebody.
Can color help prevent outbursts?
The whole idea of the pink jail cell had its microseconds of fame. It was supposed to look like the inside of a womb. But the color loses its pacifying effect. What does play a role is lighting and graphic design. If you create a space that's well lit, well signed and well marked, you will prevent confusion. People will know where they're supposed to be and where they're going. They're not going to be bumping into each other.
Are other countries experiencing similar levels of violence in the workplace?
I met with the top security government minister in France. He's in charge of crime prevention and... [Atlas shouts at his fax machine] No, that can't be. No, no, no, it cannot be! Goddammit! This is a brand-new cartridge. This has got to work. No, no, no!
What is it about today's workplace?
The technology never works... it can drive normal people like me to violence. I'm sorry, I'm just not really present here. I just don't have the time and patience for this right now, I'm sorry. I've got my fax machine here... I just put a brand-new cartridge in and it's telling me the cartridge needs to be changed. It's a $26 ink cartridge, and I can't get out the faxes from my machine. I'm going to get real ugly here, so I'm not going to subject you to that.


Blind as a... Bush?


Twins of Thin

What's your point?
When we are together, people stare at us. When we are on a train, we are always the ones that the police pick out to question. Is it that we look like we take drugs? Is it that we scare them because we are thin? People somehow are afraid of us. This was a reaction to that. We want to create a new fashion brand of women and men--clones of us. Society wants us to fit into its rules. It is about exclusion.
It is rather unsettling.
People either love it or hate it. There is no in between. Women tend to have a really angry reaction.
What's with the smells emitted in the installation viewing rooms?
It is about our identity. In shops there are smells released to influence the public. We smell exactly the same. We had a doctor take our shirts, which we had worn for three weeks, and analyze the smell and come up with an organic scent. It's the smell of wine, body odor, our eating habits. Also urine. Cats use urine to say: "This is my territory and you do not belong here."
Are you anorexic?
We do not think we have an eating problem. But people want to hear that we do. It is so irritating that everybody has this victim image. We don't have an obsession about losing weight.


By Ron Moreau

During times of war, when journalists, U.N. staffers and soldiers pour into a conflict zone, prices suddenly go insane. In Cambodia, I once paid $800 for a 50 kilometer tank ride to the Thai border. During the gulf war, a rental-car agent tried to force me to buy him a new Nissan 4x4 simply because I had dented a fender. Not surprisingly, war profiteering in Pakistan has been just as scandalous. At the outset of the U.S. campaign in Afghanistan, hotel prices tripled, a small platform on one's rooftop for TV broadcasts went for $500 a day and young men barely able to speak English demanded $100 a day--and up--to work as interpreters and guides.

The gouging was deepest in the small, western Pakistani town of Quetta last December. In Quetta, where smuggling is just about the only game in town, the influx of cash-flush journalists set off a feeding frenzy among savvy locals. When a Western cable network began broadcasting from Mullah Mohammed Omar's former stronghold of Kandahar, rumors immediately circulated that the network had paid tens, even hundreds, of thousands of dollars for safe passage from Quetta to Kandahar. One well-connected local man named Agha was quick to approach NEWSWEEK's Scott Johnson, photographer Ilkka Uimonen and me, saying he knew an Afghan tribal leader who could get us to Kandahar in a hurry.

He introduced us to Haji Abdul Bari Maruffi, a thirtysomething leader of the Alizai tribe. Maruffi laid out the deal: he didn't want to make any money, but as a tribal leader he had to take care of his people. It was a matter of his honor and our safety, he said. First, he'd have to send an advance man to pay off tribal militia manning the checkpoints en route. Then he'd have to hire a bevy of armed men to accompany us in several rented 4x4 pickup trucks.

"So, how much do you want?" we asked. "$1 million," he replied.

When the initial shock wore off, we laughed. "You've got to be kidding." Maruffi didn't crack a smile. In my notebook, he scribbled what I assume was his final offer: "$300,000." When we rejected it, he was both surprised and miffed.

The next day, we struck a deal with a young man at the border who had just driven a van in from Kandahar. Soon, Johnson and Uimonen were on their way for $400. As the war on terror moves toward its next possible targets--Sudan, Somalia, Yemen, even Iraq--you can bet the local profiteers are already calculating their take. They'll mark up everything from hotels to vehicles and security. And who can blame them? The hordes of well-heeled hacks may come their way only once. In the best capitalist tradition, the locals might as well cash in while they can.