Tuesday, May 31, 2005

Arthur Anderson Conviction Overturned

The Washington Post reports on the Supreme Court's decision overturning the conviction of Arthur Anderson LLP. Link.
The Supreme Court today threw out the June 2002 conviction of the Arthur Andersen accounting firm for destroying Enron Corp.-related documents, ruling unanimously that the jury instructions at the trial for the now-defunct company were improper.

The decision was a major defeat for the Department of Justice, which prosecuted one of the nation's largest accounting firms against the advice of numerous critics, who believed the case too weak for criminal trial. [...]

Chief Justice William H. Rehnquist, writing for the court, said the judge's instructions to the jury were too loose, failing to require proof that Andersen "knowingly" obstructed justice.

The instructions, he said, "failed to convey the requisite consciousness of wrongdoing" on the part of Andersen and its employees. "Indeed," said Rehnquist, "it is striking how little culpability" the instructions required. [...]

The District Court judge in the trial instructed the jury to convict if it found that Andersen intended to subvert or impede the SEC investigation. But the judge declined to add that the company must also be found to have acted dishonestly, despite the statute's use of the word "knowingly."

"No longer was any type of dishonesty necessary to a finding of guilt," Rehnquist wrote today, "and it was enough" for Andersen "to have simply 'impeded' " the government's investigation.

That, he said, was an improper interpretation of the statute. "Knowledge and knowingly are normally associated with awareness, understanding or consciousness," Rehnquist wrote. "Only persons conscious of their wrongdoing can be said to knowingly" behave corruptly.

I am glad that this conviction was overturned, even if it was for some legal technicality. Prosecutors should never have brought this case to trial. If a crime had been committed, it was not by an intangible entity called Arthur Anderson LLP, but by certain human beings working there. If there were guilty parties, the prosecutors totally let them off the legal hook, by prosecuting the organization. Instead of locating a few perps who committed a crime and putting them in jail, these prosecutors caused thousands of honest employees who had never even worked on the Enron account to be fired, as they put the entire company out of business. Prosecutors were more concerned with the headlines they would receive by prosecuting one of the largest accounting firms in the country, then with bringing guilty parties to justice.


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