The Supreme Court unanimously decided to overturn the Arthur Andersen the verdict but many critics feel like it was the wrong decision. The highest court said jury instructions were improper but did the ages old accounting firm squeak out on a technicality?
Chief Justice Rehnquist wrote the opinion of the court saying, “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 sheer 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.
Critics feel that Andersen broke the law and had a case history associated with companies having similar types of trouble as the now crippled Enron. With Waste Management and Sunbeam, the stage had already been set for Andersen. The court decision, like many, didn’t say that Andersen was “not guilty”, just that they needed to be retried because the initial run wasn’t done properly. So, a new trial will probably ensue.
The damage to Arthur Andersen has already been done though. No amount of court wrangling or even an acquittal of everything wouldn’t put them back to the standard they once held. Arthur Andersen once employed over 28,000 employees and had offices all over the world. The did accounting for huge companies and Arthur Andersen was one of the Big Five accounting firms that did auditing and a variety of other services. Then the indictment came and all the trust they’d built was quickly wiped away. They now have about 200 employees. No punishment a jury could hand out could match that kind of damage.
John Stith is a staff writer for murdok covering technology and business.
