Too Little Too Late: Arthur Andersen Conviction Overturned

    May 31, 2005

The Supreme Court of the United States (SCOTUS) overturned the 2002 obstruction-of-justice charge against the one-time accounting juggernaut Arthur Andersen. The once proud firm got caught up in the Enron scandal as their accounting firm and after the 2002 ruling, fell apart at the seams.

In the unanimous decision, the court ruled that instructions to jurors were too vague and broad for them to make a fair decision on the obstruction of justice charges.

Chief Justice William Rehnquist wrote the opinion, “The jury instructions here were flawed in important respects.”

The heart of the matter was the destruction of documents by employees during the initial Securities and Exchange Commission (SEC) investigation of Enron. Andersen claimed it was standard procedure because of the shear volume of paperwork they go through. The looming consequence would be that all firms would be forced to hang onto all their documents.

The court said it wasn’t unlawful for managers to instruct employees to destroy documents on a regular basis and it’s assumed that sometimes they may do this to keep facts from the government and others.

“It is, of course, not wrongful for a manager to instruct his employees to comply with a valid document retention policy under ordinary circumstances,” Rehnquist went on to say.
The decision is just one aspect of the aftermath of the Enron fallout that left over 5000 jobless and many people lost their retirement. The Bush Administration had made a point of going after white-collar criminals and this is considered a big hit for the administration.

The real losers in this decision are former employees of Arthur Andersen. The once huge accounting firm employed nearly 30,000 people with offices spread throughout the globe before the scandal happened and the company was forced to turn over its licenses. After the scandal and subsequent court decision, the huge Arthur Andersen firm was down to 200 employees.

John Stith is a staff writer for WebProNews covering technology and business.