Tuesday, May 31, 2005

Too Little, Too Late for Andersen

The US Supreme Court overturned the guilty verdict against Arthur Andersen for its alleged role in obstructing the investigation into the collapse of Enron. The firm had served as Enron's auditor and primary business consultant, and the justice department claimed that Andersen employees had shredded documents that would have been central to their case against Enron.

The Supreme Court agreed with Andersen's contention that the lower court's judge provided overly vague instructions to the jury. Since the high court's ruling was unanimous and took only one month to prepare after arguments, it is safe to deduce this case was as much of a no-brainer as the Supreme Court ever gets. The Justice Department has not announced if it will retry the case.

The guilty verdict cost Andersen its accounting license, which in turn caused the firm to implode. There is no way to reconstitute the firm into a viable company now, as the employees have scattered to other firms, and Andersen's credibility is forever tarnished.

I shed no tears for Andersen three years ago when the verdict was announced, as I had always found the firm to be arrogant. However, I hate to see procedural errors in a case that literally held the viability of a 28,000 employee company in the balance.


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