Supreme Court Overturns Andersen Conviction
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Arthur Andersen has had its conviction for destroying documents relating to Enron Corp overturned by the U.S Supreme Court. In a judgment that may have widespread implications for corporate governance, the court said that instructions to the jury had been too broad. Following the collapse of Enron and fellow disgraced company WorlCom, the U.S. introduced the Sarbanes-Oxley Act. Additionally firms became suddenly aware of the amount of information thaty they held in their records. A huge industry has grown on the back of this. The overturning of the verdict, comes at the same time as the jury is out in the trial of Richard Scrushy, CEO of HealthSouth Corp. He is the first executive to be tried under the Sarbanes-Oxley Act. The failure to reach a verdict Although the judgment might be considered part of the backlash against increased corporate governance, it is cold comfort for the 28,000 employees out of work. We pursued an appeal of this case not because we believed Arthur Andersen could be restored to its previous position, but because we had an obligation to set the record straight, Andersen spokesman Patrick Dorton said. "We are very pleased with the Supreme Court's decision." The Justice Department's John C. Richter commented "We remain convinced that even the most powerful corporations have the responsibility of adhering to the rule of law." The government has the option of seeking a retrial. Chief Justice William H. Renquist wrote the decision. The instructions at the trial were too vague for jurors to correctly determine whether Andersen had obstructed justice, he held. The documents were destroyed in the early stages of a Securities and Exchange Commission investigation into Enron's finances. The big 5 accounting firm argued that they were destroyed in the course operating a document rention policy, which mandated destruction of unnecessary documentation. The government in turn called this an "unprecedented campaign of document destruction." Andersen's defence at the trial and appeal was that the employees were only following a policy, and did not intend to thwart any investigation.
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