Arthur Andersen Case Study

Over the years many companies have decided abandon ethical practices is lieu of higher profits. Because of the high value placed on profits in America, many companies have taken extreme measures to increase profits and increase payouts for shareholders. Arthur Andersen LLP is a prime example of how business executives have been willing to make unethical business decisions in order to please clients and gain an edge on competition. In the short run, these unethical decisions may have seemed beneficial, but in the long run, the extensive consequences of this behavior was not worth any anticipated gain. Arthur Andersen made many unethical business decisions in lieu of higher profits that had drastic consequences that extended father than any executive was found liable for over $130 million dollars in litigation claims in the five years between 1980 and 1985. The litigation escaladed beyond financial consequences and the British government restricted the company from receiving any government work because of their failure to uncover fraud during an audit with DeLorean, a large automobile company based out of Britain (Arthur, 2006). Andersen’s issues continued to increase and the attorney general of Arizona filed a lawsuit against the company on behalf of 13,000 investors. In order to avoid the risk of a higher verdict by the jury, Andersen settled the case for $217 million dollars (Arthur, 2006). Over the years, Anderson was known for it’s friendly relationship with clients that resulted on many unethical business favors being exchanged. The growth of Andersen’s consulting business only further expanded

The trial was highly contended and several unfair practices were used by the government and the court during the trial. The judge, Melinda Harmon, was known for her rulings in favor of the U.S. government, and she issued very slanted jury instructions to the jury. She told the jury that “Arthur Andersen was liable for the acts of Duncan even if his acts were contrary to the partnership’s instructions” (Arthur 2002). The jury deliberated the ruling for seven days while being issues further biased jury instructions during that period. The jury found Arthur Andersen guilty on June 15, 2002. Arthur Andersen LLP. had their CPA licenses suspended, was banned from doing audits on public companies, was fined $500,000, and was put on five years of probation (Arthur 2002). Enron decided to appeal the case, but the ruling was upheld in the appellate court. Two years later, The Supreme Court unanimously reversed the decision because the judge had given the jury incorrect instructions. While the trial and initial conviction had drastic impact on the company as a whole, the ruling also caused 85,000 employees to lose their jobs worldwide and has a drastic affect on Enron’s