MSNBC Breaking News. Not that it does Andersen any good.
Supreme Court overturns Enron-related conviction of Arthur Andersen accounting firm
Supreme Court overturns Enron-related conviction of Arthur A
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yoda wrote:An interesting decision... lemme see what I can find in regars to the ruling...
I'd be interested in seeing that Yoda. Like I said, it doesn't do Andersen any good - they are finished. Even it they were to try to re-enter the accounting arena, the name will never be restored to what it once was.
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yoda
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sunny wrote:yoda wrote:An interesting decision... lemme see what I can find in regars to the ruling...
I'd be interested in seeing that Yoda. Like I said, it doesn't do Andersen any good - they are finished. The name will never be restored to what it once was.
http://news.yahoo.com/s/ap/20050531/ap_ ... r_andersen
Overturned on a 9-0 decision... apparently about instructions to the jury were too vague...
In a unanimous opinion, justices said the former Big Five accounting firm's June 2002 conviction was improper. It said the jury instructions at trial were too vague and broad for jurors to determine correctly whether Andersen obstructed justice.
"The jury instructions here were flawed in important respects," Chief Justice William H. Rehnquist wrote for the court.
The ruling is a setback for the Bush administration, which made prosecution of white-collar criminals a high priority following accounting scandals at major corporations. After Enron's 2001 collapse, the Justice Department went after Andersen first...
...Government attorneys argued that Andersen should be held responsible for instructing its employees to "undertake an unprecedented campaign of document destruction."
But in his opinion, Rehnquist noted that jurors were instructed to convict Andersen if the accounting firm had an "improper purpose," such as an intent to impede or subvert fact-finding in an "official proceeding." He noted jurors were instructed to convict, even if Andersen mistakenly thought it was acting legally.
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Here is a little more info. From Forbes.
Top Of The News
Was Arthur Andersen A Mistake?
Dan Ackman, 06.01.05, 9:46 AM ET
NEW YORK - Some, not least Arthur Andersen itself speaking through its former public relations man, see the U.S. Supreme Court's reversal of Arthur Andersen's conviction as a rebuke to the Justice Department. But the narrowness of the decision, relating simply to a few words in the jury instructions, hardly justifies that conclusion. Nor is there any chance that the Supreme Court's unanimous ruling will bring Arthur Andersen back to life.
The Supreme Court certainly did not say that Arthur Andersen was innocent or that it did no wrong. Indeed, it highlighted some of the more damning evidence, such as a statement by Michael Odom, an Andersen partner, that certainly seemed to suggest an intent to conceal wrongdoing: " '[I]f it's destroyed in the course of [the] normal policy, and litigation is filed the next day, that's great.... [W]e've followed our own policy, and whatever there was that might have been of interest to somebody is gone and irretrievable.'" Still, the Supreme Court's ruling is a good opportunity to question whether Andersen should have been prosecuted in the first place.
The decision to prosecute a firm, even more than the decision to go after an individual, is always a tough call. In certain industries like banking, or certainly accounting, a firm's criminal conviction will doom the firm and will affect the lives of thousands of employees who had nothing to do with the alleged crimes, whether as Enron or otherwise.
Even the Andersen jury recognized the conundrum that occurs when the group has done wrong, but it's not clear who in the group was responsible (see: "Andersen Jury's Philosophical Pickle.").
Andersen, of course, was destroyed not by its conviction but by its indictment. Even the threat of indictment sent clients scurrying and essentially destroyed Andersen's prospects as an auditor, because auditors are in the business of selling their reputations for integrity and probity.
The decision to indict was guided by the immensity of the Enron scandal and by Andersen's prior wrongdoing involving audits of Sunbeam and Waste Management (nyse: WMI - news - people ). The Justice Department was in a pickle: What does one do about a serial bad actor?
There is certainly some evidence that accountants in general had been, by the late 1990s, co-opted by their clients. Engagement partners were spending years serving a single client--that was the case with Andersen's David Duncan, who led the shredding of Andersen documents, pled guilty to obstruction of justice and testified against his former firm. Whole firms were lured by the prospect of consulting contracts. The number of financial statements rose.
Despite its prominence, though, Andersen may have been no worse than its competitors, says Jonathan Macey, a Yale Law School professor and co-author with Theodore Eisenberg of the 2004 article "Was Arthur Andersen Different? An Empirical Examination of Major Accounting Firms' Audits of Large Clients" published in the Journal of Empirical Legal Studies. The authors conclude, based on a study of financial restatements between 1997 and 2001: "After controlling for client size, region, time, and industry, we find no evidence that Andersen's performance significantly differed from that of other large accounting firms."
The authors don't say that Andersen was particularly good, or that the perception of a decline in audit quality was misplaced. But they reject the idea, apparently embraced by the Justice Department, that Andersen was an "outlier." It was no worse than the other Big Five: "The evidence regarding accounting firm restatement rates implies that, by this measure, one cannot meaningfully distinguish among the largest ('Big Five' or 'Final Four') accounting firms on the basis of the quality of their work." This is despite the fact that the Macey and Eisenberg article supports the conclusion that Andersen's work for Enron was seriously compromised.
In an interview, Macey said that losing one of just five firms that audit the vast majority of large public companies is a serious loss for the society, as well as for Andersen's employees (many of whom landed with the remaining Big Four anyhow). Despite the new laws and regulations adopted as part of the Sarbanes-Oxley legislation, the loss of one major firm will inevitably reduce competition and could reduce audit quality.
Of course, the Supreme Court's decision didn't find that Andersen was no worse than its brethren, or that it should not have been indicted. It merely held that the jury must be constrained to find dishonesty and corruption somewhere in the firm. But the harder question--whether the jury should be asked to convict the firm or just a few individuals or neither--that's left to prosecutors, and no one has ever figured out how to control them.
Top Of The News
Was Arthur Andersen A Mistake?
Dan Ackman, 06.01.05, 9:46 AM ET
NEW YORK - Some, not least Arthur Andersen itself speaking through its former public relations man, see the U.S. Supreme Court's reversal of Arthur Andersen's conviction as a rebuke to the Justice Department. But the narrowness of the decision, relating simply to a few words in the jury instructions, hardly justifies that conclusion. Nor is there any chance that the Supreme Court's unanimous ruling will bring Arthur Andersen back to life.
The Supreme Court certainly did not say that Arthur Andersen was innocent or that it did no wrong. Indeed, it highlighted some of the more damning evidence, such as a statement by Michael Odom, an Andersen partner, that certainly seemed to suggest an intent to conceal wrongdoing: " '[I]f it's destroyed in the course of [the] normal policy, and litigation is filed the next day, that's great.... [W]e've followed our own policy, and whatever there was that might have been of interest to somebody is gone and irretrievable.'" Still, the Supreme Court's ruling is a good opportunity to question whether Andersen should have been prosecuted in the first place.
The decision to prosecute a firm, even more than the decision to go after an individual, is always a tough call. In certain industries like banking, or certainly accounting, a firm's criminal conviction will doom the firm and will affect the lives of thousands of employees who had nothing to do with the alleged crimes, whether as Enron or otherwise.
Even the Andersen jury recognized the conundrum that occurs when the group has done wrong, but it's not clear who in the group was responsible (see: "Andersen Jury's Philosophical Pickle.").
Andersen, of course, was destroyed not by its conviction but by its indictment. Even the threat of indictment sent clients scurrying and essentially destroyed Andersen's prospects as an auditor, because auditors are in the business of selling their reputations for integrity and probity.
The decision to indict was guided by the immensity of the Enron scandal and by Andersen's prior wrongdoing involving audits of Sunbeam and Waste Management (nyse: WMI - news - people ). The Justice Department was in a pickle: What does one do about a serial bad actor?
There is certainly some evidence that accountants in general had been, by the late 1990s, co-opted by their clients. Engagement partners were spending years serving a single client--that was the case with Andersen's David Duncan, who led the shredding of Andersen documents, pled guilty to obstruction of justice and testified against his former firm. Whole firms were lured by the prospect of consulting contracts. The number of financial statements rose.
Despite its prominence, though, Andersen may have been no worse than its competitors, says Jonathan Macey, a Yale Law School professor and co-author with Theodore Eisenberg of the 2004 article "Was Arthur Andersen Different? An Empirical Examination of Major Accounting Firms' Audits of Large Clients" published in the Journal of Empirical Legal Studies. The authors conclude, based on a study of financial restatements between 1997 and 2001: "After controlling for client size, region, time, and industry, we find no evidence that Andersen's performance significantly differed from that of other large accounting firms."
The authors don't say that Andersen was particularly good, or that the perception of a decline in audit quality was misplaced. But they reject the idea, apparently embraced by the Justice Department, that Andersen was an "outlier." It was no worse than the other Big Five: "The evidence regarding accounting firm restatement rates implies that, by this measure, one cannot meaningfully distinguish among the largest ('Big Five' or 'Final Four') accounting firms on the basis of the quality of their work." This is despite the fact that the Macey and Eisenberg article supports the conclusion that Andersen's work for Enron was seriously compromised.
In an interview, Macey said that losing one of just five firms that audit the vast majority of large public companies is a serious loss for the society, as well as for Andersen's employees (many of whom landed with the remaining Big Four anyhow). Despite the new laws and regulations adopted as part of the Sarbanes-Oxley legislation, the loss of one major firm will inevitably reduce competition and could reduce audit quality.
Of course, the Supreme Court's decision didn't find that Andersen was no worse than its brethren, or that it should not have been indicted. It merely held that the jury must be constrained to find dishonesty and corruption somewhere in the firm. But the harder question--whether the jury should be asked to convict the firm or just a few individuals or neither--that's left to prosecutors, and no one has ever figured out how to control them.
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rainstorm
Arthur Andersen's 'Victory'
A retrial won't help the firm's 28,000 former employees.
Wednesday, June 1, 2005 12:01 a.m. EDT
As a unanimous Supreme Court yesterday announced its reversal of the 2002 criminal conviction of Arthur Andersen for shredding Enron-related documents, our first thought was: Now they tell us. Or, as former Reagan Labor Secretary Ray Donovan famously asked after his acquittal in 1987: "Which office do I go to to get my reputation back?"
Except that in this case, even if the proverbial office existed, there is no one left at Andersen to knock on the front door and demand restitution. The accounting giant, which once employed 28,000 people in the U.S. and 85,000 world-wide, is essentially no more. There's still an office in Chicago, but the fewer than 200 people who work there handle leftover legal and administrative chores and manage a bit of real estate.
The verdict, if not the indictment itself, was a death sentence for the partnership, 98% of whose employees had never cast an eye on an Enron audit. It was handed down by a Houston jury after 10 days of deliberation, and nearly a hung jury, following instructions from the judge that the Supreme Court now says were faulty. Anyone interested in a succinct history of Andersen's role in the Enron collapse, by the way, should make a point of reading Chief Justice William Rehnquist's 12-page ruling for the Court.
As we argued at the time, it would have been wiser for the Justice Department to go after individual Andersen partners for obstructing justice while handing over the firm to Paul Volcker, who had a clean-up plan ready to go. Instead, with one exception--David Duncan, the Andersen partner who audited Enron and turned state's evidence--no one was held responsible.
Numerous senior Andersen alumni are arguably better off now than they were pre-Enron. Many partners took their clients and vamoosed to one of the remaining Big Four accounting firms, which averted their eyes from any Enron taint. Today their services are in even greater demand thanks to Sarbanes-Oxley and the rash of post-Enron government regulations. It's one of life's political ironies that the fallout from the corporate scandals has enriched the very accounting profession that Congress claimed it was attempting to punish.
The Andersen prosecution is an exception to what has otherwise been a good Bush Administration record in prosecuting corporate wrong-doing. The Justice Department needed a political scalp at the time, and it is certainly true that Andersen's senior partners had a lot to answer for. But putting the company out of business harmed the innocent as well and arguably let the most culpable escape.
At Enron, Adelphia, WorldCom and HealthSouth, on the other hand, Justice has pursued individuals, and for the most part successfully. In the case of Adelphia, Attorney General Alberto Gonzales recently disclosed that Justice decided not to indict the company "in return for a $715 million contribution by the corporation to a Victim Compensation Fund." If that decision was based on wisdom gained from the Andersen mistake, then we suppose it wasn't a total loss.
wsj online
A retrial won't help the firm's 28,000 former employees.
Wednesday, June 1, 2005 12:01 a.m. EDT
As a unanimous Supreme Court yesterday announced its reversal of the 2002 criminal conviction of Arthur Andersen for shredding Enron-related documents, our first thought was: Now they tell us. Or, as former Reagan Labor Secretary Ray Donovan famously asked after his acquittal in 1987: "Which office do I go to to get my reputation back?"
Except that in this case, even if the proverbial office existed, there is no one left at Andersen to knock on the front door and demand restitution. The accounting giant, which once employed 28,000 people in the U.S. and 85,000 world-wide, is essentially no more. There's still an office in Chicago, but the fewer than 200 people who work there handle leftover legal and administrative chores and manage a bit of real estate.
The verdict, if not the indictment itself, was a death sentence for the partnership, 98% of whose employees had never cast an eye on an Enron audit. It was handed down by a Houston jury after 10 days of deliberation, and nearly a hung jury, following instructions from the judge that the Supreme Court now says were faulty. Anyone interested in a succinct history of Andersen's role in the Enron collapse, by the way, should make a point of reading Chief Justice William Rehnquist's 12-page ruling for the Court.
As we argued at the time, it would have been wiser for the Justice Department to go after individual Andersen partners for obstructing justice while handing over the firm to Paul Volcker, who had a clean-up plan ready to go. Instead, with one exception--David Duncan, the Andersen partner who audited Enron and turned state's evidence--no one was held responsible.
Numerous senior Andersen alumni are arguably better off now than they were pre-Enron. Many partners took their clients and vamoosed to one of the remaining Big Four accounting firms, which averted their eyes from any Enron taint. Today their services are in even greater demand thanks to Sarbanes-Oxley and the rash of post-Enron government regulations. It's one of life's political ironies that the fallout from the corporate scandals has enriched the very accounting profession that Congress claimed it was attempting to punish.
The Andersen prosecution is an exception to what has otherwise been a good Bush Administration record in prosecuting corporate wrong-doing. The Justice Department needed a political scalp at the time, and it is certainly true that Andersen's senior partners had a lot to answer for. But putting the company out of business harmed the innocent as well and arguably let the most culpable escape.
At Enron, Adelphia, WorldCom and HealthSouth, on the other hand, Justice has pursued individuals, and for the most part successfully. In the case of Adelphia, Attorney General Alberto Gonzales recently disclosed that Justice decided not to indict the company "in return for a $715 million contribution by the corporation to a Victim Compensation Fund." If that decision was based on wisdom gained from the Andersen mistake, then we suppose it wasn't a total loss.
wsj online
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rainstorm
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mf_dolphin
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rainstorm
mf_dolphin wrote:Andersen was guilty as a corporation pure and simple. While a lot of innocent Andersen employees got hurt there were even more innocent investors that got bilked as well. Let's also not forget the employess of companies like Enron who lose everything when corporations run amok.
then are you for dismantling the govt? the fed govt bilks the taxpayer every day with theivery, phony accountiing practices, and just plain lies.
they make enron look like angels. personally, im all for the govt being treated exactly as arthur andersen was. the difference between the govt and a business? a busniess cant continue to cheat its shareholders forever while the govt can bilk the taxpayer forever. put the govt on trail and put it out of business!!
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mf_dolphin wrote:Andersen was guilty as a corporation pure and simple. While a lot of innocent Andersen employees got hurt there were even more innocent investors that got bilked as well. Let's also not forget the employess of companies like Enron who lose everything when corporations run amok.
I do understand that the employees of Enron were hurt. But I new a lot of innocent people who were also hurt over this, people who never laid a finger on anything related to Enron. We were every bit as innocent.
I' a not naive - I know what was done. But it was BOTH Enron and Andersen. Andersen is the one who folded.
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mf_dolphin
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