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Monday, 17 June, 2002, 11:13 GMT 12:13 UK
Enron probe barely budged by Andersen

The conviction of accounting firm Arthur Andersen on Saturday seems likely to make US prosecutors keener in their pursuit of Enron.

But opinions are mixed as to whether the Andersen case has any direct bearing on ongoing attempts to prosecute the failed energy giant.

Law-enforcement officials have already stated their intention to step up their probe into Enron, which went bankrupt in December.

Andersen, which audited Enron's accounts, was found guilty of obstructing justice in the wider investigation into the energy trader.

Enron is under a grand jury investigation, as well as scrutiny from Wall Street regulators and Congress.

"It sends a strong message that we are going to get to the bottom of the Enron debacle and those people responsible will be prosecuted," said Leslie Caldwell, head of the criminal division of the Justice Department's San Francisco office and leader of its national Enron Task Force.

Cases conflict

But while the Andersen conviction will give prosecutors heart, it may not have far-reaching legal implications for the case against Enron.

The Andersen trial "had nothing to do with the financial machinations of Enron," said Ira Lee Sorkin, a lawyer and former official of the Securities and Exchange Commission, the US stock market regulator.

That is because Andersen was found guilty of obstruction, a charge which does not necessarily imply that Enron did anything wrong.

The government's star witness against Andersen, former Houston partner David Duncan, stood firmly behind the soundness of Enron's accounting practices, despite admitting various breaches of accounting ethics.

Spotlight swings back

The milestone in the Andersen case will, however, allow attention to swing back towards Enron, whose own case has fallen off the front pages in recent months.

The question now is what form the legal assault against the firm will take.

So far, Andersen is the only party in the case to have been hit with criminal charges: Enron and its former officials face a range of investigations and civil lawsuits, but the authorities have yet to decide how criminal law can be brought to bear.

According to speculation, former officials of the firm could be charged with fraud-related offences, or the less severe infringements of insider trading or obstruction of justice.

Achieving some form of convictions for the latter two offences could be straightforward enough, but the government is keen to make as big a splash as possible.

Lawsuits languish

Hesitation over a criminal prosecution is believed likely to keep the various civil actions in abeyance, too.

Enron has been sued by former shareholders and employees, who argue that the firm misled them over the long-term value of its shares, even as top executives were selling their own stock.

Progress in these cases would be helped by an unambiguous criminal judgement against the firm; without that, proving liability in a civil courtroom may prove too complicated.


The trial

The disintegration

Background

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15 Jun 02 | Business
17 Jun 02 | Business
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