Now we all comprehend just how impressed jurors in Houston were with all of the government’s evidence about the shredding of Enron documents by workers for Chicago-based Andersen, the once honorable accounting firm. After reaching their verdict Saturday, jurors said the shredding wasn’t that big a deal.
Nor did the supposedly nefarious deeds of David Duncan, the former Andersen partner and the government’s star witness, much bother the jurors. Duncan must be wondering why he has confessed to a crime that, in effect, jurors in the Andersen case concluded he didn’t commit.
Instead the jurors convicted what remains of Andersen on a piddling charge–one count of obstruction of justice, punishable by a $500,000 fine and probation–because Andersen attorney Nancy Temple had engineered crucial word changes in one memo. Yes, one memo.
And so, what should have been a much more targeted and ambitious case ends with jurors clearly unimpressed by the government’s central arguments, yet reaching for their own reason to convict Andersen. Rather than go after individuals at Andersen who may well have broken laws, federal prosecutors settled for a skimpy March 14 indictment of the entire company–and, in the end, for an embarrassingly weak conviction they’ll no doubt exploit in future cases stemming from the Enron debacle.
The government got a scalp. But for lack of a lengthier investigation that might have sent wrongdoers to jail, the government also eviscerated an entire company that had 28,000 U.S. employees, reduced to a less competitive four the number of big U.S. accounting firms, pre-empted the possibility that Andersen or a merger partner would pay claims to Enron shareholders and employees, and precluded the possibility that an Andersen rigorously reconstituted under former Federal Reserve Chairman Paul Volcker could become a model of industry reform.
Under the Bush administration, regulators and prosecutors are pursuing swift, sure penalties to punish and discourage corporate misconduct. Aggressively chasing down criminals and deterring potential wrongdoers probably is more effective at encouraging honest business conduct than one alternative: the endless layering on of more and more regulations. But the administration’s strategy ultimately works only if the feds really do pursue the people who commit crimes. By contrast, the feds’ vague case against all of Andersen was a frantic and transparent Washington attempt to assure citizens that, “Look! We’re doing something!”
And Andersen was the perfect patsy. The feds saw the firm as a corner-cutter that had escaped harsh penalties for its work on Sunbeam and Waste Management accounts. What’s more, Andersen admitted in January that its employees had shredded Enron documents–a practice that sounded far more menacing on the evening news than it did to jurors who heard, and dismissed, the whole story.
What really happened in Houston is that prosecutors threw all the spaghetti they could at the courtroom wall, hoping some would stick. One strand did.
Andersen’s appeal of Saturday’s verdict won’t keep the feds from launching new Enron-related cases that may be even harder to prove. As they move forward, it would be good if prosecutors zero in on people whose criminal conduct merits serious punishment, jail time included.
Cheap indictments of entire companies may make for splashier cases. But by adulthood, most of us have stopped throwing spaghetti.
