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CNN Live Saturday

Andersen Convicted of Obstruction of Justice

Aired June 16, 2002 - 18:01   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.
CATHERINE CALLAWAY, CNN ANCHOR: And now to our top story this half hour, the guilty verdict against accounting firm Arthur Andersen for its role in the fall of energy giant Enron. The shattered company faces sentencing in four months, which could include up to five years probation and half a million dollars in fines.

Peter Viles of CNN Financial News has more for us on the impact of the verdict.

(BEGIN VIDEO CLIP)

PETER VILES, CNN FINANCIAL NEWS (voice-over): On the morning of its tenth day of deliberations, a federal jury in Houston finally convicted Arthur Andersen of obstruction of justice. The first major white-collar conviction of the Enron era.

ANDREW WEISSMAN, U.S. ATTORNEY: This case was really about a simple principle. Which is, when you expect the police, don't destroy evidence. And for Arthur Andersen, that police was the SEC. And they knew they were coming, and they destroyed evidence in advance of their getting there.

VILES: It's business crippled by the case, Andersen vowed to appeal and to fight any regulators who are likely to use the conviction to bar Andersen from auditing public companies.

RUSTY HARDIN, ARTHUR ANDERSEN: I can tell you -- our position as to whether Arthur Andersen committed a crime has not changed. They did not. Not a single person there did. And if an accountancy board wants to get into all that litigation, come on down. We'll be there. This company did not commit a crime.

VILES: A strange twist behind the jury's decision: the jury convicted not because Andersen shredded tons of Enron documents, not because fired Andersen partner David Duncan said he obstructed justice himself. The jury didn't believe him. Instead, it was a single smoking gun memo.

An e-mail showing how Andersen tried to get its story straight after its client, Enron, improperly described third-quarter losses as non-recurring. The jury focused on this e-mail. Andersen lawyer Nancy Temple urging Duncan and others to alter internal memos to "delete some language that might suggest we have concluded the Enron release is misleading." OSCAR CRINER, JURY FOREMAN: It's against the law to alter that document with the intent to impair the fact-finding ability of an official procedure.

VILES: In a case marked by contentious and often personal attacks, Saturday brought one final argument: who ruined Andersen? Was it the government or was it Andersen itself?

UNIDENTIFIED MALE: In the history of the world of business, this will come out, in my judgment, as the largest act of corporate murder, ever.

SAM BUELL, ASSISTANT U.S. ATTORNEY: We don't think it was the government's choice to enforce the laws here that caused problems for Arthur Andersen, it was Arthur Andersen's own failed audit work and their choice to violate the law by obstructing justice.

(END VIDEO CLIP)

VILES: Now this Andersen investigation was originally seen as a detour in the broader Enron investigation. Today, prosecutors did vow to get to the bottom of the Enron mess, and they also told us something surprising: they're not done with Andersen. Even after two convictions, first David Duncan, now the entire firm -- prosecutor Leslie Caldwell told us, quote, "We're not finished with Arthur Andersen."

Catherine.

CALLAWAY: What will the next step be, Peter, immediately?

VILES: Well, the next step immediately was the SEC and state regulatory boards around the country are going to have to decide if they want to let Andersen continue to audit public companies, now that they have been convicted of a federal crime. As you heard in the story, Andersen will fight any efforts to stop it from continuing to practice as an auditor.

CALLAWAY: Right. OK, thank you. Peter Viles.

VILES: Sure.

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