Supreme Court Throws Out Arthur Andersen Conviction

The Supreme Court overturns the conviction of the accounting firm Arthur Andersen. The company had been convicted of instructing employees to shred documents, hindering an investigation of Andersen's role at Enron Corporation. Andersen said its officials had been reminding employees of the firm's policy of disposing of documents that are no longer needed.

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At the Supreme Court today, a major setback for the Bush administration's effort to fight white-collar crime. The justices unanimously reversed the conviction of the Arthur Andersen Company. The accounting firm collapsed in 2002 after it was found guilty of destroying documents related to the Enron scandal. NPR's Nina Totenberg has the story.

NINA TOTENBERG reporting:

Early next year, top Enron executives are scheduled to go on trial for defrauding the public and lying to prosecutors. But Arthur Andersen was not charged with defrauding anyone or obstructing justice. Those charges would have required proof that the company knew it was committing a crime. Instead, the government prosecuted the accounting firm under the witness tampering statute, which makes it a crime to corruptly persuade a witness to subvert, undermine or impede an investigation.

At trial, the government claimed that Andersen engaged in massive document destruction to impede what the company conceded was a likely investigation by the Securities and Exchange Commission. But Andersen said it merely reminded employees to follow the company's established document retention and destruction policy, and that it did so at a time when it had not been notified of any investigation or asked for any documents. The trial judge instructed the jury that Andersen could be convicted even if it honestly and sincerely believed that its conduct was lawful, and regardless of whether any formal investigation had begun.

It still took the jury 10 days of deliberation to convict, and today the Supreme Court struck down that conviction because the high court said the jury instructions were wrong. Writing for the unanimous court, Chief Justice William Rehnquist said that, `Federal law requires consciousness of wrongdoing for conviction under the statute,' and that `merely impeding a possible investigation is not criminal under the law. Indeed,' said the court, `withholding information from the government is often perfectly legal. There's no obligation to turn over to the government, for example, documents protected by lawyer-client privilege.'

`Moreover,' said the court, `document retention policies which are created in part to keep certain information from getting into the hands of others, including the government, are common, and instruction by managers to comply with these policies are legal.' That language will be a profound relief to the business community, which had watched the Andersen case with great apprehension.

Today's opinion came just 34 days after the case was argued, a remarkably speedy resolution. William Mateja, who formerly served as senior counsel for the attorney general on white-collar crime, supervised the Andersen appeal. He was candid about the loss in a case he called the poster child for white-collar correction cases.

Mr. WILLIAM MATEJA (Former Senior Counsel on White-Collar Crime): It's extremely embarrassing, but as a practical matter, I will tell you I don't think it's going to dampen the ability of the government to get convictions in similar cases.

TOTENBERG: Some of the problems the government faced in the Andersen prosecution, said Mateja, have been fixed with a new federal law passed in the aftermath of the Enron scandal. Just how that law will be affected by today's ruling is unclear. As for the Andersen case, while the Justice Department said today it's examining whether to retry it, Mateja said he did not think there will be any retrial.

Mr. MATEJA: I think that would just add more insult to injury because obviously there's nothing left of Arthur Andersen, and to spend the taxpayers' money on another prosecution would be just--defy common sense.

TOTENBERG: Rusty Hardin is the lawyer who represented Andersen at trial.

Mr. RUSTY HARDIN (Attorney for Arthur Andersen): There are 28,000 statewide employees, 85,000 worldwide, who can now go to bed knowing that the Supreme Court said they didn't get a fair trial in deciding whether their company committed a crime. So it's a vindication for them.

TOTENBERG: But for many, today's ruling amounted to voiding a death sentence after the accused has been executed. Stephen Bokat is vice president and general counsel of the US Chamber of Commerce.

Mr. STEPHEN BOKAT (US Chamber of Commerce): Arthur Andersen is dead. They were killed by the government. This started the fall of a house of cards when the government brought this prosecution.

TOTENBERG: Said Bokat, `There is no putting the company back together now.'

Mr. BOKAT: The really sad thing here is that well more than 20,000 people lost their jobs, a fine company is no longer in existence, and there is no remedy. There is no cure.

TOTENBERG: Nina Totenberg, NPR News, Washington.

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