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Arthur Andersen To Be Sentenced Today

Oct 16, 2002 | The Washington Post

It's all over but the sentencing.

When officials of Arthur Andersen LLP walk into a Houston courtroom today, they will learn what punishment U.S. District Judge Melinda Harmon will dole out to the once-proud accounting giant.

A jury convicted Andersen in June of one count of obstructing justice for altering papers related to its work for Enron Corp. Andersen faces a fine of as much as $500,000 and as many as five years of corporate probation.

In a striking coincidence, the sentencing is taking place exactly a year after Enron began to reveal the scope of its worsening financial problems. Within weeks, Enron fired Andrew S. Fastow, the chief financial officer who has since been charged with criminal fraud; laid off thousands of workers; and filed for bankruptcy.

Andersen's fate was sealed even before a jury handed down its historic decision. It now employs fewer than 3,000 people, down from 85,000 last fall. It stopped auditing publicly traded companies, which had been the lifeblood of the 90-year-old firm, in August, and all of its nearly 1,300 clients have switched to other accounting firms.

Thousands of accountants and consultants who had worked at Chicago-based Andersen defected to other accounting firms. The staffers who remain spend most of their time defending Andersen against civil suits related to its work for Enron, WorldCom Inc. and other former clients embroiled in accounting scandals.

"There certainly is some litigation the firm is working through at this time," said Patrick Dorton, an Andersen spokesman.

But Andersen has not filed for bankruptcy protection and "continues to be an ongoing business," Dorton said .

One job is training workers at Accenture, its former consulting unit, in a St. Charles, Ill., facility known as Andersen University . Andersen also continues to process payments for past audit work and has received what's believed to be millions of dollars for releasing hundreds of its partners to competing firms.

Immediately after the jury's verdict, Andersen announced that it would appeal. Lawyers said that process could take a year or more. Others suing Andersen for its role in the Enron collapse may wait even longer.

Trey Davis, a spokesman for the University of California, which lost $145 million when Enron filed for bankruptcy protection in December, said there have been no settlement talks since May. Andersen's worldwide unit and some of its global member firms settled with California and other plaintiffs in August for about $60 million.

Another loose end in the case is whether prosecutors will bring criminal charges against Nancy Temple, the Andersen staff lawyer whose suggestions about deleting items from an internal memo about Enron were cited by some jurors in the company's trial as an example of lawbreaking. Mark Hansen, a lawyer for Temple, did not return calls but has said before that her conduct was "entirely appropriate."

David B. Duncan, the lead auditor on Andersen's Enron account, awaits sentencing on his conviction on an obstruction-of-justice charge, to which he pleaded guilty earlier this year. Duncan could face little or no prison time because he testified for the government during Andersen's trial.

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