Andersen indicted

Arthur Andersen was indicted after missing a March 13 deadline to plead guilty for its part in the Enron scandal. So far, embattled Fairfield alumnus Joseph Berardino’s firm has been charged with obstruction of justice.

Andersen’s grand jury indictment, stemming from the government’s investigation of energy giant Enron’s collapse in December, illustrates the firm’s efforts to shred Enron related records in four of the firm’s cities: Houston, Chicago, London and Portland, OR.

“Obstruction of justice is a grave matter, and one that this department takes very seriously,” said Larry D. Thompson, deputy district attorney, to the New York Times. “Arthur Andersen is charged with a crime that attacks the justice system itself by impeding investigators and regulators from getting at the truth.”

This indictment is the first criminal charge ever brought against a major accounting firm, as well as the first criminal charge stemming from the Enron collapse. Andersen, one of the Big Five accounting firms, concedes that documents were destroyed but will contest the charge, denying that a crime was committed.

The firm released a statement saying, “a criminal prosecution against the entire firm for obstruction of justice is both factually and legally baseless.” They also commented that the government’s central allegation was “false and wholly unsupported by the facts,” and that the indictment was “riddled with factual and legal errors.”

Andersen claims in their statement that there is no evidence that the firm’s management in Chicago directed the destruction of documents in the Houston office. Lawyers for the accounting firm are attacking the accuracy of the indictment and compelling prosecutors to identify which partners acted with the criminal intent that is necessary to indict the entire firm.

The New York Times additionally reports that if Andersen, with approximately 85,000 employees, is convicted or pleads guilty, the firm will be barred from practicing before the Securities and Exchange Commission (S.E.C.) which governs such accounting firms. This is the main reason why many partners would rather fight the Justice Department.