June 1, 2005 in Business

Court overturns Andersen ruling

Associated Press
 

WASHINGTON – The Supreme Court threw out the conviction of the Arthur Andersen accounting firm for destroying Enron Corp.-related documents, ruling unanimously Tuesday that the jury instructions were too broad.

The decision was a defeat for the Bush administration, which had declared prosecution of white-collar criminals a high priority following accounting scandals at major corporations. But it offered only symbolic relief for Andersen, the company that, when convicted in 2002, put 28,000 employees out of work and was left virtually defunct.

“We pursued an appeal of this case not because we believed Arthur Andersen could be restored to its previous position, but because we had an obligation to set the record straight,” Andersen spokesman Patrick Dorton said. “We are very pleased with the Supreme Court’s decision.”

The Justice Department said it was disappointed and was reviewing its options, including retrying the case. “We remain convinced that even the most powerful corporations have the responsibility of adhering to the rule of law,” said acting assistant Attorney General John C. Richter.

The high court’s decision was surprisingly swift, coming just over a month after the justices heard arguments in the case.

Chief Justice William H. Rehnquist, writing for the court, said the former Big Five accounting firm’s obstruction-of-justice conviction was improper because the instructions at trial were too vague for jurors to determine correctly whether Andersen obstructed justice.

“The jury instructions at issue simply failed to convey the requisite consciousness of wrongdoing,” he wrote. “It is striking how little culpability the instructions required.”

Enron crashed in December 2001, putting more than 5,000 employees out of work, just six weeks after the energy company revealed massive write-downs. As the Securities and Exchange Commission began looking into Enron’s convoluted finances, Andersen put in practice a policy that called for the destruction of what it considered unnecessary documentation.

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