Arthur Anderson is NOT Vindicated, the Judge Just Goofed

Arthur Andersen LLP v. United States

This was not a case about whether the executives at Enron are scumbags, or whether they violated the law generally. This case was specifically about Enron’s destruction of documents before it was informed of proceedings against it. Enron’s lawyer kept telling Enron to follow its document retention policy, a statement that became a mantra in the weeks preceding the official investigation. Enron’s document retention policy included statements that “in cases of threatened litigation, . . . no related information will be destroyed,” and that if Enron was “advised of litigation or subpoenas regarding a particular engagement, the related information should not be destroyed.”

The instructions to the jury about the law of obstruction of justice were that “if it found [that Enron] intended to ‘subvert, un­dermine, or impede’ governmental factfinding by suggest­ing to its employees that they enforce the document reten­tion policy,” Enron could be found guilty. The law itself is that:

“Whoever knowingly uses intimidation or physical force, threatens, or corruptly persuades another per­son, or attempts to do so, or engages in misleading conduct toward another person, with intent to . . . cause or induce any person to . . . withhold testimony, or withhold a record, document, or other object, from an official proceeding [or] alter, destroy, mutilate, or conceal an object with intent to impair the object’s in­tegrity or availability for use in an official proceed­ing . . . shall be fined under this title or imprisoned not more than ten years, or both.”

The Court found that these instructions were misleading, specifically because they did not require the jury to find that there was any dishonesty, or any connection between the persuasion and the particular proceeding against Enron.

It seems though that the executives at Enron and Arthur Anderson were either stupid, colossally arrogant, or they wanted to get into trouble. I’ll leave you with this story from a footnote of the opinion.

“On October 31, David Stulb, a foren­sics investigator for petitioner, met with Duncan. During the meeting, Duncan picked up a document with the words “smoking gun” written on it and began to destroy it, adding “we don’t need this.” Ibid. Stulb cautioned Duncan on the need to maintain documents and later in­formed Temple that Duncan needed advice on the document retention policy.”