Andersen Prosecution Abandoned: Enron’s Final Chapter?

When the Justice Department walked away from its prosecution of Arthur Andersen last week, was it finally closing the book on the Enron saga?

The decision not to re-try the case comes only six months after the U.S. Supreme Court overturned Andersen’s 2002 conviction for obstruction of justice charges related to the Enron corporate fraud investigation and eventual collapse.

“The government requests that this Court remand the case to district court to allow the district court to vacate the conviction and the government to move to dismiss the indictment with prejudice,” the motion filed by the Justice Department in the 5th U.S. Circuit Court of Appeals early last week is quoted as saying by Reuters. According to the Washington Post the motion also said “The government has determined that it is in the interests of justice not to re-prosecute Andersen.”

The Houston Chronicle reports that the motion clears the way for the U.S. District Court in Texas to dismiss the criminal charges with prejudice, meaning the charges could not be brought again in the future. For critics of the government’s aggressive pursuit of corporate fraud, the decision not to pursue the case is the latest indication that the government went to far to boost shareholder confidence in the accuracy of financial reports by limiting opportunities for companies to disguise losses and conceal mismanagement, if not out-right fraud. For the government, the decision was based more on the bottom line.

“When weighing [the] question whether to retry this case, the question arises: Why would you charge a company that’s already defunct?” a Justice Department official told the Houston Chronicle on condition of anonymity. “That and the Supreme Court decision and some other factors weighed heavily against retrying this case.”

After Andersen was found guilty of obstruction of justice, more than 28,000 employees were thrown out of work, according to Reuters. The remaining staff of approximately 200, perform administrative duties mainly related shareholder lawsuits resulting from the firm’s previous work for Enron, Global Crossing and other companies that have been caught in the corporate fraud net.

“This represents an important step in removing an unjustified cloud over the professionalism and integrity of the people of Arthur Andersen,” said a statement issued by Andersen.

In related news, the Chicago Tribune reports that charges against former Andersen partner, David Duncan, who pled guilty to obstruction of justice and cooperated with prosecutors in the Enron investigation, are also likely to be dismissed. The government did not oppose the motion, also filed Tuesday, withdrawing Duncan’s guilty plea thus creating the expectation that the judge will dismiss the felony charge, according to the Tribune.

“This brings the curtain down on a sad, tragic period in American jurisprudence,” Andersen’s Houston-based lawyer Rusty Hardin, told the Washington Post. “Andersen is a classic case of the dangers of rushing to judgment. Everyone piled on Andersen. Once they were indicted, they were dead. They didn’t commit a crime.”


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