What caused the demise of Arthur Andersen and Co.?

Greed.

That’s according to Duane Kullberg, Andersen’s CEO and managing partner from 1981 to 1989.

Speaking at Carthage College Wednesday, he said the profit-driven company culture in the 1990s, that valued sales more highly than the ethically rigorous auditing practices that built the accounting firm, caused it to crash and burn in 2002.

Kullberg said that culture was more responsible for Andersen’s fall than a federal conviction for obstructing justice — later overturned by the Supreme Court — after allegedly destroying auditing records related to Enron when the now-defunct energy giant was under investigation for falsifying financial reports.

A 32-year Andersen employee, Kullberg traced the firm’s founding from 1913, detailing a rise that included groundbreaking approaches to recruiting accountants from college campuses and training them in uniform accounting practices.

They offered a consulting service portfolio at the request of General Electric, which wanted help setting up computerized systems to accumulate and present financial data.

By the time Kullberg took the reins, Andersen was an international player, increasingly involved in providing consulting services. By 1988, it was the largest consulting firm worldwide, deriving 40 percent of earnings from that side of the business.

That brought growing demand for greater independence and a bigger piece of the money pie from partners on the consulting side, while those on the tax-audit side militated against revising the company’s historic approach to treating all partners as financial equals.

Under Kullberg, two operating units were created: Arthur Andersen, the tax-audit/accounting group, and Andersen Consulting, both under Andersen Worldwide, each under its own managing partner.

The equal compensation system also was revised, with funds being set aside to reward individual partners and teams of partners for superior performance.

Fissures widened dramatically in 1997 when Andersen Consulting (now Accenture) won an arbitration against Andersen Worldwide and broke off on its own after the tax-audit group set up its own competing consulting service.

“All of a sudden, they went back into the arena of business consulting. It was untenable,” Kullberg said.

Kullberg laid the bulk of the blame on Enron for its role in Andersen’s 2002 demise, saying “a lot of people didn’t tell the truth,” didn’t disclose relevant relationships with investment houses to Andersen auditors and hid financial information.

But, he added, “there were certainly things in Enron that management people in Arthur Andersen should have smelled out.”