WASHINGTON - A federal grand jury yesterday indicted the Arthur Andersen accounting firm in the Enron scandal, the first criminal charges in the biggest bankruptcy in the United States.
The Justice Department charged the accounting giant with obstructing justice in the probe of Enron's collapse, threatening the auditor's survival.
The eight-page criminal
indictment is the first significant development in the more than two-month-old Justice Department investigation into the collapse of the Houston-based energy giant in December.
Andersen, a Big Five accounting firm headquartered in Chicago, had been Enron's auditor until it was dismissed in January.
Andersen admitted in January that employees in its Houston office last autumn shredded Enron-related records that had been sought by federal regulators.
Prosecutors charged that Andersen had shredded tonnes of documents and the destruction effort had spread far beyond the firm's Houston office.
"In addition to shredding and deleting documents in Houston, instructions were given to Andersen personnel working on Enron audit matters in Portland, Chicago, and London to make sure Enron documents were destroyed there as well," the indictment said.
Justice Department officials said no individual Andersen employees were charged in the indictment although the investigation was continuing.
The indictment was obtained last week from a grand jury in Texas but was held under seal while the Justice Department tried unsuccessfully to reach a plea agreement with Andersen.
The maximum fine for the charges is US$500,000 ($1.15 million) and five years' probation.
But Andersen, which has lost major customers over the Enron collapse, has said that a criminal indictment would put the company in "grave jeopardy".
Andersen reacted to its indictment by assailing the Justice Department for its "extraordinary abuse of prosecutorial discretion".
"Given the circumstances in this case, this is a gross abuse of Government power. The Department has refused to allow the firm to tell its story to a grand jury, in violation of both department policy and basic precepts of fundamental fairness. In fact, it is unclear what evidence was presented or whether any witnesses appeared before a grand jury."
- AGENCIES
