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Wednesday, 20 March, 2002, 17:50 GMT
Andersen pleads not guilty
Andersen logo
The US arm of the crisis-hit accountancy firm Andersen has pleaded not guilty to charges of obstructing justice by shredding documents relating to the collapse of Enron.

The managing partner of the firm's Houston office entered the plea on behalf of the firm at a hearing in the city.

Andersen is accused of destroying "tons" of paperwork and trying to purge electronic data in order to avoid an investigation into the collapse of Enron, the largest bankruptcy in US corporate history.

Andersen's troubles
Charged with obstructing justice after "tons" of Enron-related documents shredded
Sacked partner in charge of Enron audit, denied corporate responsibility, vowed to defend itself "vigorously" against charges
If found guilty, faces ban from auditing listed firms, effectively putting it out of business
Clients including Merck, Sara Lee, FedEx and Delta drop Andersen as auditor

The firm, which audited Enron's accounts, faces a possible sanction of being barred from auditing stock market-listed companies, which would effectively put it out of business.

There could also be fines of hundreds of thousands of dollars.

Rusty Hardin, an Andersen attorney, had said the company would demand a trial within weeks to challenge what he called the government's flimsy evidence.

"An indictment is just as bad as a conviction in terms of the company's reputation unless we get a quick trial and vindication," said Mr Hardin.

The company has already lost some major clients in the wake of the charges, and its non-US offices are set to abandon the US arm, and merge with rival accountancy giant KPMG.

Andersen has described the prosecution as "a gross abuse of government power".

The indictment alleges that senior Andersen officials told its employees to destroy thousands of documents within days of notice that the company would be investigated by the US financial regulator, the Securities & Exchange Commission.

Back-up plans

The SEC has said it has contingency plans to ensure that, if Andersen collapses, other auditing firms will be able to take over its commitments.

Andersen also faces the prospect of lawsuits from disgruntled Enron employees and people who owned Enron stock, which is now virtually worthless.

The firm has lost more than 30 clients, worth $100m to it in annual fees, and merger talks with rival firms in the US have collapsed over concern about the extent of its legal problems.

Hundreds of Andersen employees demonstrated outside the Houston courthouse on Wednesday against the proceedings.

See also:

19 Mar 02 | Business
Questions over Andersen break-up
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