Hacker Newsnew | past | comments | ask | show | jobs | submitlogin

Would it make sense for Arthur Andersen to help Enron cook the books and when it inevitably exploded go down with it? Probably not, yet it still happened.


Arthur Andersen is a very salient example. It went from $10 billion/year in revenues to nothing overnight because of the damage to the brand (who wanted the Arthur Andersen name on their public financial statements after Enron?)

Yet, their implosion was the result of a conviction for obstruction of justice that was overturned by the Supreme Court: http://en.wikipedia.org/wiki/Arthur_Andersen_LLP_v._United_S... ("In the court's view, the instructions allowed the jury to convict Andersen without proving that the firm knew it had broken the law or that there had been a link to any official proceeding that prohibited the destruction of documents."). See also the relevant e-mail used for convicting the company: http://en.wikipedia.org/wiki/Nancy_Temple ("The Supreme Court's unanimous reversal of the conviction reinforces the opinion that the jury should not have inferred any liability on Arthur Andersen based solely upon the October 16 memo.")

In reality, it's unlikely that Arthur Andersen (as an entity) knew or directed any destruction of documents. What happened was that the lead partner on the Enron account (a high up guy within the company) did so, without the knowledge or approval of the company's management (as a general rule, professional services firms have very diffuse power structures with important partners having almost complete autonomy). Andersen definitely helped Enron cook the books, but it was the partner on the Enron account, and those under his employment, that engaged in the wrongdoing. That definitely helped his bottom line, but at the expense of creating a risk that ultimately brought the entire firm down.




Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: