New York ? Former U.S. Federal Reserve chairman Paul Volcker offered a plan Friday for Arthur Andersen LLP’s survival that includes replacing top management and installing an independent board that he would head.

He said the plan would succeed only if the federal indictment of the firm were dismissed and if a cap is placed on the firm’s financial liability from the Enron Corp. scandal.

“All that has to come together to make this initiative viable and successful,” Volcker said at a hastily arranged news conference.

Even as Volcker advanced his plan, the defections of dozens of major clients continued. Abandoning Andersen Friday were Occidental Petroleum Corp., Waste Management Inc., the Chicago Mercantile Exchange and others. Abroad, the firm’s New Zealand partners jumped to Big Five rival Ernst & Young.

Total defections now stand at more than 70 since the start of the year.

The changes outlined by Volcker go much further than recommendations made by his committee earlier this month, which included a proposal to split Andersen’s auditing from its consulting services.

While the latest proposal is reasonable and could save the company from imploding, it should be seen as a “Hail Mary defense,” said Itzhak Sharav, an accounting professor at Columbia University’s business school.

“The problem he will have is convincing the Justice Department” to dismiss the indictment, he said.

Volcker, who heads an oversight committee charged with making sweeping reforms at the firm, said he would lead the new Andersen governing board. Other members would include former U.S. Sen. John Danforth; C. Michael Cook, the former chief executive of Andersen competitor Deloitte & Touche; and former U.S. Comptroller General Charles Boucher.

The new board would fire top managers, he said. However, Volcker wouldn’t comment on whether chief executive Joseph Berardino would be among those told to leave.

Volcker suggested the indictment against Andersen could be dismissed without prejudice, meaning the charge could be reinstated by prosecutors if they feel reforms at Andersen are insufficient.

Lawyers suing Andersen for its audits of Enron would have to agree to limit damages to an amount Andersen could pay without going out of business, he said. The Securities and Exchange Commission would also have to end its investigation without issuing a fine that could bankrupt the company, Volcker said.

Enron filed for bankruptcy in December following revelations that it used questionable accounting methods to mask billions of dollars in debt and inflate profits.