Arthur Andersen guilty of obstruction of justice
Arthur Andersen was convicted today of obstruction of justice by shredding Enron-related documents.
The verdict could be the death knell for the shattered accounting firm and one that boosts US prosecutors’ efforts to get to the bottom of the Enron scandal.
he jury in Houston, Texas took 72 hours over 10 days to decide that the destruction of paper and computer files was not routine housekeeping, as Andersen contended, but an attempt to thwart investigations into Enron.
Andersen faces up to five years of probation and a fine of up to dlrs 500,000 (£333,000).
It also could be fined up to twice any gains or damages the court determines were caused by the firm’s action and barred from auditing public companies probably putting the crippled firm out of business.
The verdict did not come easy; the jury said on Wednesday it was deadlocked and was ordered back to work.
On Friday, the judge gave jurors greater flexibility to reach a guilty verdict by ruling they did not have to agree on who committed a crime as long as they all believed someone at the firm ‘‘acted knowingly and with corrupt intent’’.
District Judge Melinda Harmon will sentence the firm later.
Andersen had lost hundreds of clients and partners even before its conviction in the first criminal trial to emerge from the Enron scandal. The firm and its employees are likely to face more prosecutions.
The verdict is also a potential boon for prosecutors trying to get to the bottom of the Enron debacle. They have argued that Andersen had intimate knowledge of the complex off-the-book partnerships Enron used to boost its image of financial health before its collapse into bankruptcy last December.
The energy company is under a grand jury investigation, as well as scrutiny from Wall Street regulators and Congress.
Prosecutors spent a month presenting evidence from employees, federal regulators and FBI agents. They also showed jurors mounds of documents, e-mails and handwritten notes they said proved Andersen had covered up a scandal.
The star prosecution witness was David Duncan, the former Andersen partner who was in charge of the Enron audit team.
He pleaded guilty to obstructing justice in April and spent nearly a week on the witness stand, telling jurors that he had signed an agreement with Andersen to present a united front that neither did anything wrong.
He said he reneged on the agreement after a lot of ‘‘soul searching’’.
‘‘I obstructed justice,’’ he testified. ‘‘I instructed people on the (Enron audit) team to follow the document retention policy, which I knew would result in the destruction of documents.’’
