Harrah’s shareholders to advise on Andersen

David Strow

Monday, March 11, 2002 | 11:08 a.m.

Harrah's Entertainment Inc. of Las Vegas is seeking guidance from its shareholders on whether it should keep or drop beleaguered accounting firm Arthur Andersen as its auditor.

The matter will be voted on at Harrah's annual shareholders meeting, set for May 2 at the Rio. The board of directors of the Las Vegas-based casino company has unanimously recommended the retention of Andersen, its auditor for more than 15 years.

Such a vote on whether to retain its auditor is not new for Harrah's, which has asked its shareholders to ratify the selection of Andersen in previous years. But the language used by Harrah's in this year's proxy statement is new, and acknowledges shareholders might be jittery about keeping Andersen in the post-Enron era.

"If the stockholders fail to ratify the selection (by majority vote), the board of directors will reconsider the selection of that firm (Andersen)," the proxy statement said. "Even if the selection is ratified, the board of directors, at its discretion, may direct the appointment of a different independent public accounting firm at any time during the year if the board of directors determines that such a change is in the best interests of the company and its stockholders."

Ratification by the shareholders isn't required, Harrah's said, but is being sought "as a matter of corporate practice."

Andersen representatives will be present to make a statement and answer questions, the proxy statement indicated.

In Las Vegas, Andersen's losses since the Enron scandal broke have been minimal. The only local firm to have dismissed Andersen so far is Hard Rock Hotel.

Andersen's presence in the Las Vegas casino industry is substantial -- MGM MIRAGE, Mandalay Resort Group and Station Casinos Inc. all use Andersen as their independent accounting firm. None of these companies have indicated, at least so far, that they intend to fire Andersen.

Andersen has been dismissed or resigned from at least 27 public companies so far this year. The largest defection by far came last week, when Atlanta-based Delta Air Lines dismissed the Chicago-based firm after 53 years.

Separately, the New York Times and the Wall Street Journal reported this morning that Andersen is talking with rival Deloitte & Touche Tohmatsu about selling some or all of its operations.

At the same time, Andersen is negotiating with federal prosecutors over whether it can avoid criminal charges.

Besides the Justice Department, the Securities and Exchange Commission is investigating Andersen's work for Enron.