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Last Updated: Tuesday, 31 May, 2005, 16:43 GMT 17:43 UK
Andersen's Enron verdict quashed
Man cleaning Enron logo
The Enron debacle prompted a clean-up of corporate America
The US Supreme Court has overturned accounting firm Arthur Andersen's conviction for destroying Enron-related documents before the firm's collapse.

The court ruled that the conviction was improper because instructions to the jury in the 2002 trial were "flawed".

Chief Justice William H Rehnquist said the instructions were too vague for the jurors to decide correctly whether Andersen had obstructed justice.

The decision overturns a federal court appeal that upheld the guilty verdict.

The case has now been sent back to the federal courts for further proceedings.

Acting Assistant Attorney General John Richter said the Justice Department - which launched the case - was "disappointed" with the decision and would will carefully examine the ruling before deciding whether to retry the case.

Enron fallout

In October 2002, the auditor was fined $500,000 and sentenced to five years' probation for its role in the collapse of energy giant Enron.

The jury instructions were flawed in important respects
Chief Justice William H Rehnquist

It was found guilty of a single count of illegally instructing its employees to destroy documents relating to Enron.

Enron went bankrupt in December 2001 with massive debts after mass frauds were discovered, prompting an investigation of its finances by the Securities and Exchange Commission (SEC).

As the watchdog carried out its inquiries, Andersen instigated a policy of destroying Enron papers that were not needed for the case.

During the original 2002 trial, government lawyers argued that by instructing its staff to "undertake an unprecedented campaign of document destruction", it had obstructed the course of justice.

Burden of guilt

However, Andersen appealed against the ruling, arguing that jurors should have been told they could only find Andersen guilty if they believed the group had knowingly acted to obstruct the SEC probe.

Arthur Andersen office plaque
Andersen is now a mere shell of its former self

The Supreme Court agreed with the company. "The jury instructions were flawed in important respects," Chief Justice Rehnquist wrote in his ruling.

He added that it was striking how little burden of guilt was needed for a conviction in the original case.

He explained that jurors had been told that even if Andersen honestly and sincerely believed it had acted within the law, the jury could still convict.

Experts described that the Supreme Court's decision to quash Andersen's conviction as a setback for President George Bush's administration.

The US has been shaken by a number of high profile corporate scandals in recent years, which prompted the government to make the prosecution of white-collar criminals a priority.

Fallen giant

Before the case, Andersen was one of the world's top five accountants.

However, by the time all of the court dealings related to Enron's collapse had come to an end the firm had all but ceased to exist.

After it was indicted on federal fraud charges in March 2002 almost all of its clients fled, while the auditor itself sold off units and whittled down its workforce of 85,000.

Today, it employs approximately 200 people, mainly involved in administrative and legal work.

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25 May 05 |  Business
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26 Aug 04 |  Business
Q&A: The Enron collapse
08 Jul 04 |  Business
Corporate America in the dock
20 Jan 04 |  Business
The Andersen Files
09 Jun 04 |  Business
Enron auditor fined $500,000
16 Oct 02 |  Business

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