Arthur Andersen Indicted for Obstruction of Justice in Enron Scandal

On March 14, 2002, the U.S. Department of Justice announced the indictment of Arthur Andersen LLP on one count of obstruction of justice for destroying “literally tons of paper documents and other electronic information” related to the Enron collapse. The indictment, handed down by a federal grand jury in Houston, marked the first time a major accounting firm faced criminal prosecution for complicity in corporate fraud.

The single-count indictment charged that Andersen “knowingly, intentionally and corruptly” persuaded and attempted to persuade Andersen employees and others to destroy, alter, and conceal documents to impede federal investigations. Deputy Attorney General Larry Thompson announced the charges, noting that the firm had orchestrated a coordinated document destruction campaign across multiple offices.

The indictment detailed how Andersen instructed personnel in Portland, Oregon; Chicago, Illinois; and London, England, to join the shredding operation. In London, partners orchestrated a parallel effort to destroy Enron documents within days of learning about the SEC inquiry. The destruction continued even after the SEC publicly announced its investigation on October 22, 2001, stopping only when the SEC formally served a subpoena on November 8.

The indictment represented the last moment when the federal government pursued criminal prosecution of a major corporation for aiding and abetting accounting fraud. Arthur Andersen employed 85,000 people worldwide and audited many of America’s largest corporations. The decision to indict the entire firm—rather than just individual executives—would have devastating consequences, ultimately destroying the company and serving as a cautionary tale about corporate accountability that subsequent administrations chose to ignore.