The US Supreme Court today overturned the conviction of one-time accounting giant Arthur Andersen for destroying Enron Corporation-related documents because of flawed jury instructions.
In a defeat for the US Justice Department, the unanimous high court ruled 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 US employees lost their jobs.
Andersen, which had been Enron's longtime auditor, was convicted on a single count of corruptly persuading its employees to destroy documents in October and early November 2001 to keep them from federal investigators.
The shredding continued until Andersen received a subpoena from the Securities and Exchange Commission on November 8th, 2001, for its records involving the energy trading company.
Andersen's lawyers had argued that jurors should have been told that they needed to find the company had acted knowingly to subvert an investigation to be found guilty.
Chief Justice William Rehnquist in the court's opinion agreed with the company.
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. He said it was striking how little culpability the instructions required.
The Supreme Court overturned a federal appeals court ruling that upheld Andersen's conviction, and the justices sent the case back for further proceedings.