LEISURE & ARTS
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Ethics and Andersen Didn't Add Up
By Leah Nathans Spiro

03/20/2003
The Wall Street Journal
D8
(Copyright (c) 2003, Dow Jones & Company, Inc.)

FINAL ACCOUNTING

By Barbara Ley Toffler

(Broadway Books, 272 pages, $24.95)

It was her lowest professional moment. Barbara Toffler was having lunch with a favorite CEO, a former client. "Now, as I sat with him in a private dining room in the financial district looking over New York harbor, he called me to account. . . . `You were selling us stuff you didn't think we needed.' Then he summed it all up with one sentence. `Barbara, this is not the you I used to know,' he said. I had to agree with him. This was not the me I used to know."

From 1995 to 1999, Ms. Toffler headed the Ethics and Responsible Business Practices Group at Arthur Andersen, at one time a respectable sort of job title but, after the accounting scandals, an oxymoron if there ever was one. Ms. Toffler was not an accountant but a consultant who peddled ethics programs to Andersen clients, programs that involved setting up an in-house ethics officer and instituting various policies and procedures, like a hot line or ombudsman for handling complaints. All this ethics help, naturally, generated plenty of fees for Andersen.

"Final Accounting" is the morbidly fascinating story of Ms. Toffler's metamorphosis from naive ethics consultant to cynical, chastened ethics consultant. Ms. Toffler tells a broader story, too, of an important company, a guardian of free markets, going from the motto "think straight, talk straight" to something close to: lie, cheat and shred. She wants to give us a sense, she says, of "what it was like to work at a respected company as its culture began to decay" and of "what happens when the values of an organization begin to distort your own."

How could Andersen have been such a docile guard dog? How could it have ignored the transgressions of its clients, from WorldCom to Enron? Ms. Toffler's main conclusion is that the Andersen culture was corrupted by the grab for consulting dollars. As others have noted by now, an accountant finds it very difficult to sound off about a client's financial shenanigans if he needs the client's far more lucrative consulting business.

The story begins when a headhunter calls Ms. Toffler. At the time, she is running her own consulting business, after eight years at Harvard Business School as an assistant professor of organizational behavior. She joins up, soon discovering a corporate atmosphere where ethics matter little; she thinks that she can change Andersen but discovers that she is just a fragile individual who doesn't walk but runs to change her own ethics to conform with those of the organization she now works for.

She becomes a hustler who now admits to elbowing aside internal competitors with the best of them and, pressured by partners, fleecing her clients by billing them for vastly more than what she thought the firm's ethics services were worth. It is a deliciously sordid tale, where Ms. Toffler plays the role of a minister trying to adapt to four years in a brothel.

Ms. Toffler, who wrote "Final Accounting" with Jennifer Reingold, a senior editor at Worth magazine, names many names, including Joseph Berardino, the ex-CEO of Andersen, whom she portrays unflatteringly as an entirely pecuniary man, even though she credits him with doing the right thing by disclosing the firm's shredding of Enron documents. She is especially critical of Andersen's refusal to start its own ethics program.

But she saves the harshest criticism for herself. In what can only be described as professional hara-kari, she recounts the many things that she is ashamed of doing, such as pouncing on a young public-relations woman and billing her $250,000 a month to teach her how to set up an ethics office. She describes the tricks of the trade, such as "billing your brains out" and the "fee f---," which refers to the Darwinian way that fees were split up internally, often causing the client to lose out on the most qualified Andersen person for the job so that the firm could reward the partner who reeled the client in.

Ms. Toffler's biggest crime, as an author, is her humorlessness, given the irony in her predicament. A lesser one has to do with the wounded credibility of her point of view: If she did all these yucky things, is it possible that her mea culpa is less than pure -- that it is meant to be exculpatory? She may well be trying to pull back the curtain on corporate grime. But she may also want to show us graphic evidence of how corporations can crush otherwise virtuous individuals, presenting herself as Exhibit A.

In any case "Final Accounting" may not help Ms. Toffler's career as an ethics consultant, a profession that comes out looking as bad as that of accountants. Her description of a consultant is someone who "borrows your watch to tell you what time it is." And Ms. Toffler implies that ethics consultants are like all the rest, although hamstrung because, legally, people who pour their hearts out in confidential ethics sessions can be subpoenaed for what they say there. This has a certain chilling effect. So much for the ethics of probing a firm's ethics.

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Ms. Spiro is a financial writer based in Greenwich, Conn.