Court of Appeals Upholds Arthur Andersen's Conviction in Enron Case

A federal appellate court has upheld a jury’s conviction of Arthur Andersen LLP for obstructing a Securities and Exchange Commission investigation of its client Enron.

The former Big Five accounting firm was convicted June 15, 2002, and the 5th U.S. Circuit Court of Appeals, in a 38-page opinion released Wednesday, agreed with the jury, the Houston Chronicle reported.

"The conviction of Arthur Andersen was an important milestone in promoting responsible corporate behavior and respect for the law," said Andrew Weissmann, head of the Justice Department's Enron Task Force and lead prosecutor in the Andersen case.

In late 2001, as the SEC launched an expected investigation into Enron’s accounting practices, Andersen began a program of mass shredding of Enron documents, citing a little-known policy to destroy documents that were not needed.

Andersen had argued during the trial that employees followed the policy and that the firm was not trying to hinder the investigation.

Some jurors told the Houston Chronicle at the time of the verdict that their decision was based not on the shredding, but on an e-mail from a firm lawyer advising a partner to change an internal memo about Enron’s financial disclosures.

Judge Patrick E. Higginbotham discussed the impact of the decision. "Today we decide one of the many cases arising from the rubble of Enron Corporation, which fell from its lofty corporate perch in 2001 wreaking financial ruin upon thousands of investors, creditors, and employees," he wrote. "Like a falling giant redwood, it took down with it many members of its supporting cast. Our present focus is upon one of those, Arthur Andersen, LLP, then one of the largest accounting and consulting firms in the world."

Andersen spokesman Patrick Dorton said Wednesday in a prepared statement that the nearly defunct company was disappointed by the ruling, but "given the constraints of the appellate process, we are not surprised by this decision."

"We continue to believe strongly that the criminal prosecution of a firm of 28,000 people was unjustified and the ensuing collapse of Arthur Andersen was an undeserved tragedy for its employees, clients and the business community at large," Dorton said.

You may like these other stories...

CFOs and management accountants are playing an ever-increasing role in supporting the adoption of natural capital accounting in their organizations, according to a recent report.Natural capital – forests, rivers,...
The issue of international assignees was, for a long time, limited to a small number of companies – meaning only those that operated on an international scale. But in recent years, global expansion has shifted into...
Steve Jobs. Sergey Brin. Mark Zuckerberg. Each of these individuals, and their companies, are celebrated as changing the face of the technology. They all followed a similar path to success: excelling at one thing and...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.