Jun 022005

Recently, the Supreme Court overturned the conviction of Anderson Consulting for their part in document destruction and obstruction in the Enron case. Lots of people seem to be reporting that Anderson was "cleared" of wrong-doing. This is simply not true.

When Andersen’s PR guy characterized the court’s decision as dispelling "an unjustified cloud over the professionalism and integrity of the people of Arthur Andersen," that’s a bit of a stretch. When he termed the shredding of 2 tons of documents on the eve of a subpoena a "routine business decision," it strained credibility. And when Andersen’s attorney asserted that the company and its employees "never intended to do anything wrong" and "certainly never intended to obstruct justice," well, that’s what he’s paid to say, of course.

The Supreme Court merely disagreed with the instructions given to the jury by the presiding judge. This is not a finding of "not-guilty," but a procedural issue, and the door is open for Anderson to be retried. There is of course, lots of discussion about the pluses and minuses of retrying this case. After all, Anderson is essentially dead already. Good points are made on both sides, and I’m not sure I have a strong opinion one way or the other. However, my position will change if the media and the business community continue to trumpet this as a "clearing of Anderson." Then I think I’d have to come down on the side of retrying the case.

Let’s face it…things were a lot shady with Anderson’s audits. As the Court pointed out, Andersen had hired lawyers as early as Oct. 8, 2001, to defend it against expected litigation arising from the Enron scandal. On Oct. 9, Andersen’s in-house lawyers termed an investigation of their firm by the Securities and Exchange Commission "highly probable." The very next day, Andersen partner Michael Odom instructed Andersen employees to "comply with the firm’s document retention policy" (wink, wink), adding that "[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."

As a person with nearly twenty years in the records management industry, I can tell you that a company can never destroy records if there is a reasonable expectation of litigation, and certainly there was such an expectation here.

And let’s not forget that only a few weeks after its conviction came the news that WorldCom, another Andersen client, had overstated its earnings by several billion dollars. Andersen also audited the books of tarnished telecom companies Global Crossing and Qwest. Accounting irregularities at those companies spawned civil and criminal investigations.

I have sympathy for the hundreds of Anderson employees who lost their jobs through no fault of their own, but let’s not get all uppity about Anderson being "innocent."

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