Arthur Andersen LLP and the US Justice Department may yet renew efforts to settle an obstruction-of-justice indictment against Enron Corp's former auditor before a May 6 trial, experts said.
Negotiations over deferring prosecution broke down Thursday after Andersen rejected prosecutors' conditions. The government holds the upper hand because it's armed with a guilty plea and cooperation of former Andersen partner David Duncan, who is expected to testify about ordering the shredding of documents relating to Enron's collapse, experts said.
Andersen and the US have strong incentives to avoid a trial, experts said. Prosecutors may want to focus on investigating fraud at Enron, which filed the largest bankruptcy in history. Experts said a conviction would be a death blow to Andersen, which fired 7,000 workers, lost more than 200 clients and faces lawsuits seeking billions of dollars in damages.
"The logic of the situation is that it will be resolved before it gets to trial," said Stanley Arkin, a Manhattan defense attorney with Arkin Kaplan & Cohen. "The government would like to get on with the main investigation, which is Enron. At the same time, Andersen has to try to survive for the future, if it can.
Negotiations may have hinged on the scope of wrongdoing Andersen would have to admit.
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