Sat, Mar 16, 2002 - Page 1 News List

Grand jury indicts indignant Andersen

ENRON FALLOUT The Big Five accounting firm called its indictment for obstructing justice `a gross abuse of government power,' but US officials begged to differ



A US federal grand jury has indicted accounting firm Andersen for obstructing justice by destroying truckloads of records related to investigations into Enron Corp's collapse, the US Justice Department said on Thursday.

Threatening the firm's survival, these were the first charges in a more than a two-month-old Justice Department investigation into the Houston-based energy giant's collapse in December in the largest bankruptcy in US corporate history.

Andersen, a Big Five accounting firm headquartered in Chicago and which had been Enron's auditor until it was fired in January, blasted the prosecution of the firm as "a gross abuse of government power."

Deputy Attorney General Larry Thompson said the indictment included allegations of widespread criminal conduct by Andersen, charging the firm sought to undermine justice by destroying evidence relevant to investigators.

The indictment alleged that Andersen partners and others, at urgent and mandatory meetings, told employees to immediately destroy documents related to Enron.

The Justice Department alleged that Andersen partners began a plan for the wholesale destruction of documents just days after Enron alerted the auditor on Oct. 19 that the US Securities and Exchange Commission had begun an inquiry into special partnerships created by the energy firm.

"Employees were told to work overtime if necessary to finish the job of destroying documents. The shredder at the Andersen office and Enron building ran virtually constantly," Thompson said.

Thompson said the indictment "alleges that, at the firm's direction, Andersen personnel engaged in the wholesale destruction of tons of paperwork and attempted to purge huge volumes of electronic data ...."

He added the records were destroyed in late October and early November, a time when Andersen knew they were relevant to federal inquiries into Enron's collapse.

The indictment was obtained last week from a federal grand jury in Houston, Texas, but was kept under seal until Thursday while the Justice Department tried unsuccessfully to reach a plea agreement with Andersen in which the company would admit guilt.

In a statement, Andersen said the indictment "is both factually and legally baseless" and that none of the document destruction "occurred with the knowledge, much less the consent, of senior firm management."

Also see story:

Is the Enron bell tolling for Arthur Andersen?

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