Arthur Andersen receives $500,000 fine

Los Angeles Times

HOUSTON — Arthur Andersen, the accounting firm once revered for its commitment to integrity, was sentenced to the maximum $500,000 fine and five years' probation yesterday for obstructing a federal inquiry into the collapse of its former client Enron Corp.

Bob Palmquist, a former partner with Arthur Andersen LLP, yesterday expressed anger over the demise of his former employer outside U.S. District Court in Houston. Associated Press

Prosecutors accused the firm of destroying Enron-related documents in an attempt to keep information from federal securities regulators. A Houston jury convicted the firm, but several jurors said later they rendered the verdict because they believed an Andersen in-house attorney had asked a Houston-based partner to alter a memo, not shred it.

"We will go to our graves saying we were not guilty," Andersen's lawyer, Rusty Hardin, told the judge. "We were a large company with good intentions."

Hardin said the firm intends to appeal.

U.S. District Court Judge Melinda Harmon said, "I believe a maximum fine is warranted to send the message to the auditing community that the destruction of documents will not be tolerated. ... The full impact of Andersen's conduct will never be known because many of the documents could not be recovered."

Harmon ordered the firm yesterday to retain all documents from its audits of Enron and other clients. She also said that Andersen could not dissolve itself without first obtaining her approval.

Andersen has all but disintegrated since prosecutors indicted the firm in March. The firm, founded in 1913, once had 111 U.S. offices, but now has only three with "critical mass," Andersen spokesman Patrick Dorton said. Nonetheless, the firm has vowed to stave off bankruptcy, and still reaps revenue from renting out a former college campus that Andersen owns in St. Charles, Ill.

Arthur Andersen retains fewer than 1,000 U.S. employees, down from 28,000.