Enron collapse: Accounting firm charged

The US government has charged the Arthur Andersen accounting firm with obstructing justice by shredding documents and deleting computer files about the collapsed energy giant Enron.

The one-count indictment announced yesterday was returned last week by a federal grand jury in Houston, Texas, where Enron is based, Deputy Attorney General Larry Thompson said.

‘‘The firm sought to undermine our justice system by destroying evidence,’’ Thompson, the department’s number two official, said.

Andersen said the criminal proceedings were tantamount to a ‘‘death penalty’’ against the firm.

The charge claims a possible motive for the shredding, saying that Andersen was aware of a wide range of unfavourable financial information about Enron - information that was unavailable to the investing public.

‘‘Andersen and Enron ... improperly categorised hundreds of millions of dollars,’’ said the indictment. Just days before the destruction began, Enron publicly corrected its books, reporting a dlrs 1.2 billion (€1.28bn) drop in the company’s value.

Andersen said in a statement said the indictment was ‘‘a gross abuse of government power’’.

‘‘A criminal prosecution against the entire firm for obstruction of justice is both factually and legally baseless,’’ said Andersen, which has sought to lay blame for the document destruction on its lead Enron auditor, David Duncan, and others in its Houston office.

Duncan, who was fired by Andersen, was co-operating with investigators, said his lawyers, Vince DiBlasi.

Enron had no comment on the indictment.

Thompson said the Justice Department’s investigation into Enron and Andersen, including actions by partners at the firm, was continuing. He held open the possibility that a plea agreement could be worked out with Andersen.

The bankruptcy of Enron has rocked the Washington political establishment. President George Bush has close ties to the company’s former chairman, Kenneth Lay.

Enron has been Bush’s biggest political financial supporter over the years and the company has also contributed to both Republican and Democratic members of Congress.

The company’s collapse cost millions of investors their money, while thousands of current and former Enron employees lost the great bulk of their retirement savings.

Congressional investigations of Enron have focused on the complex web of partnerships that helped the company hide debt and post unrealistic profit figures.

The Securities and Exchange Commission is also investigating.

Andersen contends that top management at its headquarters in Chicago was unaware of the document destruction.

The Justice Department, however, characterised the destruction of documents and e-mails as much broader, with employees in Portland, Oregon, Chicago, and London being instructed to join in the shredding.