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Friday, 19 April, 2002, 07:30 GMT 08:30 UK
Arthur Andersen to face trial
Andersen graphic
Beleaguered accountancy firm Arthur Andersen is to face a potentially fatal day in court after all, following its abrupt abandonment of talks with the US government.

The firm stands accused of obstructing justice by shredding documents relating to failed energy firm Enron after federal authorities had announced an investigation.

Until Thursday, the company had been desperately trying to find a settlement and avoid facing the charges, since they could deal the final death-blow to the battered company's hopes of survival.

But Andersen has now failed to meet a deadline for analysing the proposals on offer, some of which it has rejected, and the Department of Justice is now working towards a court date of 6 May.

Meanwhile, clients and partners are continuing to jump ship, edging the company closer to the point of no return.

US media reports suggest that four out of five partners have signed non-binding letters of intent, saying they intend to move on.

Destroying documents

Andersen's lawyers have been tantalisingly close to a deal all week.

Within the last few days the outline of a possible settlement has emerged.

But in the end the government's stipulations on an admission of guilt went further than Andersen's lawyers were prepared to go.

The government was prepared to give the company a three-year stay on prosecution.

But in return, Andersen would have to co-operate in the investigation of what went wrong at Enron and admit in public that it knew employees were destroying documents.

That could effectively remove the company's licence to operate in the US.

"We are no longer in talks (with the Justice Department)," said Rusty Hardin, one of the firm's attorneys.

Added difficulties

The company's position is further complicated by the fact that its Houston chief, David Duncan, has already pleaded guilty to obstructing justice.

Andersen had fired him in January.

And the firm also faces $300m in civil cases, now that criminal talks have broken down.

Two days of talks involving a court-appointed mediator ended on Wednesday with no solution in sight.

The BBC's Manuela Saragosa
"In America companies facing criminal charges can do deals with the authorities to avoid trial"
The BBC's Stephen Evans
"Enron executives are still being investigated along with a string of banks"
See also:

16 Apr 02 | Business
Andersen and E&Y in French marriage
10 Apr 02 | Business
Deloitte snaps up Andersen UK
08 Apr 02 | Business
Enron victims prepare legal action
01 Apr 02 | Business
More firms flee Andersen
29 Mar 02 | Business
Andersen backs rescue plan
30 Mar 02 | From Our Own Correspondent
Andersen's angry accountants
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