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Arthur Andersen Rejects Plea Bargain

Aired March 14, 2002 - 12:17   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: Embattled accounting firm Arthur Andersen has rejected a plea bargin for its role in the Enron matter saying that it would be essentially the death penalty for the firm. Arthur Andersen may be indicted as early as this afternoon. CNN Financial News reporter Tim O'Brien now in D.C. to bring us up to date on what's happening on this front. Tim, good afternoon.

TIM O'BRIEN, CNN FINANCIAL NEWS CORRESPONDENT: Hey, Bill. Yes, not much question Arthur Andersen's very survival is on the line here. It's already besieged by Enron-related lawsuits that could reach into the hundreds of millions of dollars. So it should be no surprise the company is ready to fight an anticipated justice department indictment, that it views as the ultimate poison pill for the company.

At this point, we do know a little bit about the plea negotiations. Andersen had agreed to fire all individuals at whatever level who were responsible for the document destruction or who allowed it to happen. If they violated the law, let them be prosecuted. The company has agreed to submit to remedies by the Securities and Exchange Commission too, remedies directed at the Houston office where the document shredding was concentrated.

The government, however, wants to go much further that that and charge the firm itself with obstruction of justice, a serious felony. Now, in a letter to the justice department's criminal division, lawyers for the company said: "The department proposes an action that could destroy the firm, taking the livelihoods from thousands of innocent Andersen employees and retirees." And in a statement to the media, the company says: "The firm is not guilty. This expected indictment represents an unprecedented exercise of prosecutorial discretion, and we believe a gross abuse of government power."

Now, the mere stigma of being charged with a felony could be curtains for this troubled accounting firm. The justice department had threatened to immediately indict Arthur Andersen if a plea deal had not been reached by 9:00 this morning. Well, the company is asking for more time. It wants to present its side of the story to the grand jury. It has asked for a meeting with top justice department officials and the principal officers of the company. No word yet from the justice department. We are expecting something later this afternoon. It could be announcement of a delay. It could be the announcement of an indictment -- Bill.

HEMMER: Tim, when we talk about Arthur Andersen and its role, many times document shredding comes into play here. The company saying this is just how we go about our business. It's common procedure. Perhaps the government has a different view of it. But specifically with Arthur Andersen, is that the core of the case here?

O'BRIEN: That is the core, the fact that the document shredding occurred after Arthur Andersen officials knew that a Securities and Exchange inquiry had been officially begun. There are other investigations also pending into Arthur Andersen's accounting procedures. They are being headed by the Securities and Exchange Commission. They're pretty much on hold until the justice department acts on this shredding issue.

HEMMER: OK, Tim, thanks. Tim O'Brien. Again, we may hear later -- more later today and we will have it for you out of Washington when it happens. Tim, thank you.

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