The Arthur Andersen accounting firm was sentenced yesterday to five years’ probation and fined $500,000 US for obstruction of justice for its handling of documents related to the collapse of energy trader Enron Corp. last year.
The punishment is the maximum allowed under U.S. law. Lawyers for the firm, a shadow of the $4-billion US entity it was a year ago, have said they will appeal.
Prosecutors and the U.S. Securities and Exchange Commission asked for the harshest possible penalty to make an example of the firm.
“Andersen’s conduct in obstructing the Securities and Exchange Commission investigation of Enron, we submit, contributed to contributed to significantly the historic shaking of the foundations of our markets,” prosecutor Sam Buell told the judge before sentencing.
Former federal prosecutor Robert Mintz, now a partner with McCarter & English in Newark, N.J., said probation means Andersen is on notice it faces more fines and extended probation if it violates terms handed down by U.S. District Judge Melinda Harmon.
Probation seems a hollow threat for a firm that closed its audit practice and offices across the U.S. after its conviction in June following a six-week trial.
Andersen’s criminal trial was the first to emerge after last year’s dizzying collapse of Enron, the giant energy services company.
Andersen was accused of shredding Enron-related documents last year to thwart a Securities and Exchange Commission accounting probe.