US accounting giant Arthur Andersen crippled in 2002 for its involvement with Enron was indeed "naughty", or at the very least "grossly negligent", says Rob Cox on Breakingviews.com. Yet was the destruction of firm the right outcome for what may merely have been the "paper-shredding of a few of its dunderhead executives"?
The question has once again come to the fore following the Supreme Court's decision to overturn Andersen's 2002 criminal conviction on Tuesday. According to the chief justice, their decision to withhold damaging information was not "inherently malign", says Jess Bravin in The Wall Street Journal. However, for Andersen which has slumped from the illustrious US company that employed some 30,000 staff to employing just 200 people to mainly handle the firm's remaining lawsuits the decision is "little more than an epilogue".
On the other hand, the court's ruling could make life more difficult for the government's "broader crackdown on white-collar crime": applying the Sarbanes-Oxley corporate-reform law, which imposes stiff penalties on any person who interferes with a government investigation, will now "pose a challenge", says Bravin.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
As for Andersen, its quick death was the first "visible manifestation" of panic following the collapse of Enron, says Cox on Breakingviews.com. The law changes imposed since then have meant that the four remaining audit firms fulfil nearly all the audit requirements of the biggest firms in America. Yet smaller companies have been excluded, and as a result, these outfits have seen their audit fees rise by some 98%. So while Andersen's downfall will undoubtedly prevent large-scale accounting scandals such as that at Enron or Parmalat, the cost has indeed "been a heavy one".
-
8 of the best properties for sale with indoor swimming poolsThe best properties for sale with indoor swimming pools – from an award-winning contemporary house in East Sussex, to a converted barn in Hampshire
-
Chinese stocks slump on first trading day of 2025Chinese stocks suffered in the new year from their worst first day of trading since 2016, despite a state stimulus package
