The US Supreme Court has unanimously overturned the conviction against accounting firm Arthur Andersen for shredding documents related to the Enron investigation.
The high court found that the trial judge's 2002 jury instructions were so vague that jurors could have convicted the company of obstruction of justice for innocently destroying documents related to the Enron investigation.
The case was sent back to Houston for a possible new trial.
It took the high court only a month to come to the decision Chief Justice William Rehnquist wrote it in an unusually short 11 pages. He said Houston U.S. District Judge Melinda Harmon erred when she told jurors they could convict Enron's accountants even if people at the company didn't know what they did was illegal.
The opinion focused mostly on the question of whether Arthur Andersen employees were "knowingly" and "corruptly" persuaded to destroy documents. Rehnquist wrote that jurors were not required to find that wrongdoers had "the requisite consciousness of wrongdoing. Indeed, it is striking how little culpability the instructions required." He noted jurors were instructed they could convict even if Andersen "honestly and sincerely believed its conduct was lawful."
During the trial, Arthur Andersen argued workers followed company policy for throwing away notes and drafts of documents. The firm maintained it never intended to obstruct a Securities and Exchange Commission probe.
Tom, who's a longtime critic of the Enron Task Force, is happy if a bit bitter with this ruling. I can accept what he's saying and what the others he's linked to are saying, but there's something that's bugging me in all this. Nobody disputes that Andersen shredded documents that may have been material to the Enron criminal investigations. The argument, as far as I can tell, is over what an appropriate remedy for that should be. Loren Steffy puts his finger on what's bothering me.
It might be useful, in sorting out the court's decision, to remind ourselves of what jury foreman Oscar Criner said after convicting Andersen. The jury instructions, he said, didn't matter. It was [Andersen lawyer Nancy] Temple's memo [which "reminded" Arthur Andersen's audit team in Houston to shred Enron-related documents ahead of a government investigation the firm knew was coming] that convinced jurors that Andersen's leaders knew they were destroying evidence.
It would be useful, too, to recall that Criner said the government used Andersen's abysmal track record of blown audits to show that its recidivist history motivated Temple in urging her colleagues to shred with gusto. More specifically, her mention of Enron in the memo sealed the firm's fate, Criner told the Chronicle at the time.
It's also useful to remember what Michael Odom, an Andersen partner, told 89 employees about the firm's document retention policy at a training meeting on Oct. 10, 2001:
"If it's destroyed in the course of normal policy, and litigation is filed the next day, that's great. ... We've followed our own policy, and whatever there was that might have been of interest to somebody is gone and irretrievable."
It might be useful to remind the IRS of that the next time you're audited. Then again, maybe not.