Decision in Arthur Andersen v. United States
The Supreme Court issued a quick, unanimous and concise defeat to the Government today in Arthur Andersen v. United States, No. 04-368, overturning the accounting company’s conviction for obstruction of justice. (The case was argued on April 27, the last argument day of the current Term, and the Chief Justice’s opinion for the Court was issued less than five weeks later).
The case arose after officials at Arthur Andersen issued a number of directives requiring employees to adhere to the company’s document retention policy, even though that policy required destruction of documents and even though the firm knew that an SEC investigation was imminent and that the SEC would want access to those destroyed documents. The Government indicted Arthur Andersen under 18 U.S.C. 1512(b)(2), which applies to anyone who “knowingly uses intimidation or physical force, threatens, or corruptly persuades another person . . . with the intent to . . . cause or induce any person to . . alter, destroy, mutilate, or conceal an object with intent to impair the object’s integrity or availability for use in an official proceeding.” Accepting the Government’s position, the district court instructed the jury that Arthur Andersen could be convicted under this provision even it “honestly and sincerely believed that its conduct was lawful” and without proof of any nexus between the document destruction and any particular official proceeding. After receiving these instructions, the jury convicted Arthur Andersen of obstruction.
The Supreme Court held that the jury instructions “failed to convey properly the elements of a “corrup[t] persuas[ion]” conviction under
I am reminded of Raymond Donovan’s comment after being exonerated. The former Reagan cabinet member said, “Now, what court do I go to to get my reputation back?”
For Andersen, the answer is no court at all. The firm is for all intents and purposes defunct. It exists as a shell only to defend itself in lawsuits. With all of Andersen’s former clients having found new auditors, it’s hard to see how it could ever recover even a fraction of its former self.
Comment by Marc Shepherd — May 31, 2005 @ 1:59 pm
Marc: quite apart from their document-retention policies, Arthur Andersen’s complicity in Enron’s shenanigans proves that they shouldn’t be auditing anyone’s books.
Comment by phil — May 31, 2005 @ 2:50 pm
Phil: If I were in need of an auditor, I wouldn’t hire Andersen. But that is normally a decision that takes place in the free market. AA was already hemorrhaging business as their complicity in the Enron debacle became apparent, but at least they had a shot at turning things around.
Instead, as a result of their conviction, AA was precluded from auditing public companies as a matter of law, and something like 25,000 people lost their jobs. I’m sure many of them recovered, but the conviction no doubt caught hundreds, if not thousands, of innocent people in its maw.
Comment by Marc Shepherd — May 31, 2005 @ 4:19 pm
Catching my eye: late edition
Today has been so hellaciously busy that the morning run-down got postponed to the afternoon and then to the evening. Before the day gets away I think there are a few things worth a look at: Marc Schulman of American…
Comment by The Glittering Eye — May 31, 2005 @ 7:24 pm
At least AA didn’t have to do its legal work pro se within AEDPA.
Comment by Roger Friedman — May 31, 2005 @ 10:45 pm