A US federal grand jury has indicted accounting giant Arthur Andersen on criminal charges for shredding documents and destroying e-mails connected to failed energy giant Enron.
Deputy Attorney General Mr Larry Thompson said the indictment by a grand jury in Houston, Texas, charges the firm with obstruction of justice for destroying "literally tonnes of documents" during the probe of accounting irregularities by Enron.
"The indictment catalogues allegations of widespread criminal conduct by the Arthur Andersen firm, charging that the firm sought to undermine our justice system by destroying evidence relevant to the investigations," Mr Thompson said.
"It alleges that at the firm's direction, Andersen personnel engaged in the wholesale destruction of tonnes of paperwork and attempted to purge huge volumes of electronic data or information".
Andersen responded by assailing the Justice Department for its "extraordinary abuse of prosecutorial discretion".
"Given the circumstances in this case, this is a gross abuse of government power," the Chicago-based firm said in a statement. "The Department has refused to allow the firm to tell its story to a grand jury, in violation of both Department policy and basic precepts of fundamental fairness. In fact, it is unclear what evidence was presented or whether any witnesses appeared before a grand jury."
A criminal conviction could be a devastating blow to Andersen because it could bar the firm from providing audit services to publicly traded companies regulated by the Securities and Exchange Commission.
News reports suggested Andersen officials rejected a deal to plead guilty to criminal charges as the Justice Department took a hard line in the case. Company representatives were ordered to appear in federal court next Thursday in Houston.
Mr Thompson said the indictment claims the accounting firm ordered its offices around the world to destroy documents and e-mails related to Enron as the energy firm began to collapse last October.
Even though the documents had not been subpoenaed, "at the time, Andersen knew full well that these documents were relevant to the inquiries into Enron's collapse," he said.
Mr Thompson said the destruction of documents was a broad effort by Andersen, not just by a few employees. "This is the indictment of a firm, of a partnership," the official said.
But Andersen argued that criminal prosecution against the entire firm for obstruction of justice "is both factually and legally baseless".
AFP