Andersen RI unit to merge with E&Y

Adianto P. Simamora, The Jakarta Post, Jakarta

The Indonesian unit of troubled accounting giant Arthur Andersen, called Prasetio, Utomo & Co., is planning to merge its operation with Ernst & Young (EY), according to a source.

The source said late last week that the merger was aimed at providing certainty to clients.

He declined to provide details as the merger talks had yet to be completed.

The managing partner of Prasetio, Utomo & Co., Soemarsono S. Rahardjo, would not confirm the merger, but he did say that the firm had held talks with a major accounting firm.

The largest accounting firms are PriceWaterhouseCoopers (PwC), Klynveld Peat Marwick Goerdeler (KPMG), Deloitte Touche Totmatsu (DTT) and Ernst & Young.

"Yes ... we are now in formal talks over a merger plan," Soemarsono told The Jakarta Post.

"The merger negotiations are going ahead and the day-to-day developments have been very fast, but we are committed to ensuring both companies benefit from the merger," Soemarsono said.

Prasetio, Utomo & Co. said earlier that it was in no hurry to join the merger frenzy of Arthur Andersen's other Asian units, as its business was not effected by Andersen's dealings with collapsed energy giant Enron.

Andersen's headquarters in Washington is reeling from the Enron debacle. It faces criminal charges over document shredding, billion-dollar lawsuits and an exodus of prestigious clients.

Soemarsono said Andersen's affiliate in Indonesia was not losing clients despite the credibility blow from the Enron scandal.

Andersen affiliates around the world have been seeking mergers with other major accounting firms.

The Andersen affiliates in Singapore, New Zealand and Australia have signed deals to merge their operations with Ernst & Young.

Asian merger talks with Ernst & Young are a blow for another rival, KPMG International, which last month said it was negotiating a deal with 13 Asian affiliates. That deal fell through as global talks for a merger of Andersen's and KPMG's non-U.S. businesses collapsed.

Nonetheless, the Thai units of Andersen Worldwide and KPMG International have reached a preliminary agreement to merge their operations in the country.

Meanwhile, the Andersen affiliates in Hong Kong and China merged with PricewaterhouseCoopers.