David Duncan and the Arthur Andersen Case

In May 2002, Andersen was prosecuted for obstruction of justice based on two main reasons. First, David Duncan, a former Andersen partner in charge of the Enron audit, destructed related documents to keep them out of the investigation. Second, Nancy Temple, an in-house attorney for Andersen, suggested the management to pay attention to the document retention policy. The jury convicted Andersen and believed David Duncan was corruptly persuaded to impede the integrity of the justice proceedings. In 2005, the Supreme Court overturned the conviction of Andersen based on flawed jury instructions. However, this verdict is too late for Andersen which already exists in name only.

The World English Dictionary defines corrupt as lacking in integrity; open to or involving bribery or other dishonest practices; to become or cause to become dishonest or disloyal. In this case, corrupt is not appropriate applied to the actions of Andersen. In the internal October 16, 2001 email, Nancy Temple suggested Andersen to pay attention to a potential investigation and try some protective actions. I read the original text of the email and find there’s no word show that Nancy corruptly persuaded the management to destroy documents. She just recommended the management to care about document retention policy. It’s an attorney’s responsibility to provide clients with advices about imminent litigations. Thus an attorney’s persuasion of withholding of documents under a valid document retention policy cannot be defined as a dishonest practice. So corrupt is not appropriate applied to the actions of Andersen.

I believe Andersen violated the law. The management, including David Duncan, obviously knew Andersen would get an investigation due to the audit fai...

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...n 2002, Enron has burdened huge debts and filed for bankruptcy protection. Andersen also had no money to pay for angry investors. The plaintiffs, Enron’s investors and employees, could not get enough compensation from Enron and Andersen. So they named these rich banks in the lawsuit to try to recover their huge loss. The plaintiffs believe those banks assisted Enron to conceal huge debts and encouraged people to invest Enron.

Merrill Lynch and Credit Suisse claimed they didn’t know the actual financial situation of Enron. They defensed that there’s no substantial evidence to verify that investment banks played a significant role in the Enron scandal. However, to pursue own profits these banks may have conducted improper acts to mislead investors. They obviously would like to settle out of the court and avoid a lawsuit which will damage their reputation greatly.