Supreme Court to Review Andersen Conviction

The U.S. Supreme Court said that it would review the conviction of shuttered accounting firm Arthur Andersen for obstruction of justice for destroying documents related to its audits of bankrupt energy giant Enron Corp., according to published reports.

The high court agreed to hear an appeal by the Chicago-based firm, once the largest in the nation, arguing that its conviction must be reversed because of improper jury instructions, including the definition of the term "corruptly persuades," Reuters reported Friday. The Supreme Court is expected to hear arguments in the case in April, with a decision due by the end of June, Reuters said.

Andersen shuttered its audit practice in August of 2002 following its conviction two months earlier. Houston-based Enron, the nation's seventh-largest publicly owned company before it imploded in a then-record bankruptcy in December 2001, was Andersen's largest client.

Last June, three circuit court judges unanimously upheld a Houston jury's decision and denied the accounting firm's appeal to reverse the conviction, which effectively put an end to the firm that was once considered the "gold standard" of auditing.

In the decision upholding the conviction last year, Circuit Judge Patrick E. Higginbotham wrote, "Andersen provides no authority to justify reversal of the jury's verdict, and we find none. To the contrary, Andersen's various assertions are belied by the underlying events." Among other things, the judges disagreed with Andersen's contention that evidence presented by the government of the firm's troubles with the Securities and Exchange Commission relating to its audits of Sunbeam and Waste Management wasn't relevant to the Enron case. In their decision, the judges said, "These 'prior' acts were indisputably relevant to the question of Andersen's intent in its destruction of Enron-related documents."

In appealing to the Supreme Court, Reuters said that Andersen argued that it was not obstruction of justice to dispose of any of the documents when it did. "Arthur Andersen did not commit a crime," the company said, according to the report. The firm also argued that the jury instruction incorrectly equated "corruptly persuading" with "improper purpose," and that the informal SEC investigation in late 2001 was not an "official proceeding" that the law requires.

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