Justices Wary of Accounting Firm's Enron Conviction

The Supreme Court indicated today that it is wary of the 2002 witness tampering conviction of former Enron accounting firm Arthur Andersen, bombarding a Bush administration lawyer with skeptical questions while reserving mostly sympathetic inquiries for Andersen's counsel during oral arguments.

A federal jury in Texas convicted the firm of a single count of "corruptly persuading" its employees to destroy documents in October 2001, just as Enron was beginning its financial meltdown and a Securities and Exchange Commission investigation of both the energy company and its accountants loomed.

But the justices seemed to accept Andersen's contention that, under the law in force in 2001, the government had put far too sinister an interpretation on what was actually the normal culling of a big company's files.

The government's "sweeping position," Justice Anthony M. Kennedy observed, " would cause major problems for every corporation or small business in the country. I just don't understand it."

Andersen was using its document retention policy "as a cover" for subverting an imminent investigation, Deputy U.S. Solicitor General Michael J. Dreeben replied. He likened Andersen's document purge to a criminal wiping his fingerprints from a crime scene, even though no charges had yet been filed against him.

Andersen, which once had 28,000 employees, is now a mere corporate shell. In addition, the statute at issue in this case has been largely superseded by the 2002 Sarbanes-Oxley law, which toughened the rules against document destruction.

Still, defense lawyers said that the court's ruling in this case could affect the practices of attorneys and accountants, as well as offer clues to the court's future interpretation of Sarbanes-Oxley.