Caught in the web

Washington, May 31 (Reuters): The Supreme Court on Tuesday overturned the conviction of onetime accounting giant Arthur Andersen for destroying Enron Corporation-related documents because of flawed jury instructions.

In a defeat for the US Justice Department, the apex court ruled unanimously that the jury instructions failed to convey properly the elements of what constitutes a conviction for corrupt persuasion.

Andersen’s conviction resulted in the downfall of the company, which had been one of the “Big Five” accounting firms. More than 28,000 American employees lost their jobs.

Andersen, which had been Enron’s long-time auditor, was convicted on a single count of corruptly persuading its employees to destroy documents in October and early November 2001, to keep them away from federal investigators.

Chief Justice William Rehnquist in the opinion agreed with the company’s arguments that jurors should have been told that they needed to find the company had acted knowingly to subvert an investigation in order to be found guilty.

Under ordinary circumstances, it is not wrong for a manager to instruct employees to comply with a valid document retention policy, even though it is created in part to keep certain information from others, including the government, he said.

Rehnquist said the jury was told that even if Andersen honestly and sincerely believed its conduct was lawful, the jury could convict. “It is striking how little culpability the instructions require, and that the instructions dilute the meaning of “corruptly” so that it covers innocent conduct,” he noted

The Supreme Court overturned a federal appeals court ruling that upheld Andersen’s conviction, and the justices sent the case back for further proceedings.

Acting Assistant Attorney General John Richter said the Justice Department will carefully examine the decision and will determine whether to retry the case.

“The Department of Justice is disappointed in today's decision by the US Supreme Court regarding jury instructions given in the case, but of course we respect the court’s decision,” Richter said.

“The Justice Department’s decision to charge Arthur Andersen was based at the time on the determination that the substantial destruction of documents in anticipation of an investigation by the Securities and Exchange Commission violated the law. We remain convinced that even the most powerful corporations have the responsibility of adhering to the rule of law,” he added.