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Arthur Andersen Convicted for Obstruction of Justice

Aired June 15, 2002 - 11:56   ET


FREDRICKA WHITFIELD, CNN ANCHOR: Welcome back. We want to take you now to Houston where attorneys on both sides of the Arthur Andersen are talking now.

RUSTY HARDIN, ANDERSEN DEFENSE ATTORNEY: ... we're totally satisfied they did. They asked to speak to us for a few moments. Nothing really substantive was said. I think it's very clear that they feel heavily responsible and that this was not an easy decision for them as they all said.

I don't know whether they're going to choose to speak to you or not. We didn't ask them that. I think they're talking to the government right now. And I think we had 12 citizens try to do what they thought was right and that's what we've asked for.


HARDIN: I can't say that until people talk to them because they came back with an answer that would seem to say no, that they found the same person on a special issue. So, I think it's too early for us to read in what was determinative or not.

I think they're more than capable of explaining that to people. I have no idea whether they'll talk to you now or ultimately one day. They clearly feel -- I don't sense any sense of exhilaration or happiness back there. But I'd like to, you know, C. Andrews who has been here all along as the corporate representative -- may have some comments.

I think we'd like to restrict ourselves right now to thanking the jury for their conscientiousness. Obviously we're disappointed.

QUESTION: How soon will you file an appeal?

HARDIN: First question was, "How soon will we file for appeal?"

Right away, as soon as the system -- you can't appeal until we're sentenced. The judge set a sentencing date of October 11. Ironically, of course, October the 12th is the date of the famous Nancy Temple e-mail. I believe October the 11th is a Friday. So, we can't appeal until after we've been sentenced. The judge will pronounce sentencing at that date.

QUESTION: What did they want to talk to you about? HARDIN: It wasn't clear. The question was, "What do they want to talk to us about?" They asked to speak to the attorneys. We went back there. They shook hands. There were some hugs. But no one really is ready to ask questions now. They indicated they would probably call and some of them will. Some may have questions later. There was nothing of substance to talk to back there.

QUESTION: Did they give you a hug or did they hug each other?

HARDIN: Oh, no -- me...


HARDIN: Well we felt that all along. And of course, they came in this morning and didn't want to hear the testimony read back that they had asked for yesterday. But I think that it is clearly a mistake for us to try to guess what they did. They're now free agents to talk about it and I think they're the better source. I don't know what was determinative on their part. Obviously, we were tremendously disappointed yesterday, but we may find out that's not the determining factor.

QUESTION: Rusty, that it took 10 days, does that at all vindicate...

HARDIN: Question was, "Did 10 days vindicate us?" I don't know that 10 days vindicates us. I think what it does show that anytime that you -- you have to remember what this charge said.

This jury charge said that Arthur Andersen could be found guilty, even if only one employee, not matter how low ranking was the person who destroyed the documents, and even though that employee might not have thought what they did was wrong, and even though that employee might have not have believed what they did was a crime, and even though the jury couldn't unanimously agree on which employee it was, Arthur Andersen to be found guilty.

We think that is a system out of balance, quite frankly. But it is something we have to live with.


HARDIN: Pardon me?


HARDIN: Well I think Mr. Andrews and Mr. Curran can answer that better.

C.E. ANDREWS, ANDERSEN PARTNER: Well, as to how we're feeling about it, obviously we're very disappointed, needless to say. So I think that's an obvious answer to that question.

But we do not regret going through this trial. We think we started this trial. Supposedly it was an open and shut case. We had no chance. We think -- I think we all believe our defense team put on a remarkable trial. They put the face of Andersen out there. The purpose of this was for us to fight for our honor, our dignify.

We did not think we committed a crime and still do not think we committed a crime. As Rusty says, we respect the process, but the process is not over. And we think it was very important for our people, the families of our employees and partners, our clients and friends for us to go through this trial. And I think the fact that it took ten days to reach this verdict says that this was a very difficult decision to reach in a case that supposedly was an open and shut case from the beginning.

So I think we have put a great face of Andersen on this. I think our witnesses, the people that testified, I am proud of our organization and our people. It is the right thing to do. We have no regrets for having done it. The indictment itself crippled our organization and so this was our chance to tell our story, to get our story out there and I think we told it very well through this process.

QUESTION: Where does Andersen go now as a business?

ANDREWS: Well, we will obviously take the conclusion today and reflect on it as an organization and we'll decide where we go forward. As I said, the indictment substantially crippled our organization. So we're substantially smaller today than we were on March 14 as a result of the indictment. But we'll re-group and re-assess based on today's outcome and do that in an orderly fashion and not jump to any quick decisions on that.

QUESTION: Do you anticipate there will be proceedings from the SEC and the state accounting regulators, given the verdict here?

ANDREWS: Can you repeat that?

QUESTION: Do you anticipate that there will be proceedings before the SEC and state regulators regarding Andersen's ability to continue auditing given the verdict here?

HARDIN: C.E. can answer that. The question is background -- but I'm going to make an observation about it. That is will the state accountancy boards and others have initiated proceedings. Let me tell you something, everybody can up jump in and pile on all they want, but it won't change the facts. And every single accountancy board that takes this verdict as they do, will be fought with.

I'm saying that quickly, and the client makes the ultimate decision, but I can tell you our position as to whether Arthur Andersen committed a crime has not changed, they did not, not a single person there did. And if an accountancy board wants to get into all that litigation, come on down. We'll be there.

This company did not commit a crime. And so if, in fact, somebody wants to litigate that further, we'll be there.

QUESTION: You're a critic of the government's decision to bring the indictment in the first place. (UNINTELLIGIBLE). What is your feeling on (UNINTELLIGIBLE). HARDIN: There's a thin line I told some of you all today between -- I don't want to take away and be out here just as we have been notified we've been found guilty and somehow be attacking people. I don't want to do that. I've stated my views in there. I suspect both the company representatives and some of the lawyers will have more detailed responses and observations in the coming days as to what we think about this whole process.

But I don't want to be out here on the courthouse steps right after this taking shots. I will say this. There is a very serious troubling question for corporations in the future in light of what's happened here in terms of full cooperation. You know, people are going to have to ask the question very carefully, does it make any difference to fully cooperate, turn over everything voluntarily, self- report when you end up like this.

You know, an accounting firm of $9 billion in revenues and $28,000 in this country and 8 thousand in the world, is going -- is ultimately a totally different company, now no longer a big five. Did that make sense in light of what the jury heard for ten days. That we'll talk about later.


HARDIN: No, we said the death sentence for Andersen ultimately would probably be the indictment. That's what C.E. is saying. This we were fighting over a legacy and that legacy we'll continue to fight over.

C.E. can address the status of the company and whatever, and of course -- but I'm saying to you that if I'm asked, my position will be by anybody, this company should continue to fight.

QUESTION: What I mean, no matter how small, the company is still in business. Is that going to continue or not? (UNINTELLIGIBLE)

ANDREWS: Again, we are thinking through that process. No, we don't have to rush out the day and close the doors to our offices, not at all. So don't expect that. won't be any announcement that we'll be having and we will assess the outcome of this and make our decisions about it.

We're not going to stand here today on the courthouse steps and re-evaluate our business for you. We'll do that in due-course. As it pertains to the SEC and the state agencies, the state accounting boards. The SEC, we've been in communication with them on this subject so that will be dealt with in an orderly way. The state boards I can't speak for, but to Rusty's points, each one of those is different and I'm sure there will be some that will attack us and we'll deal with that.


ANDREWS: I don't -- I can't speak for the SEC.

HARDIN: Actually I don't know. But one thing on the SEC and I think C.E. joins me on this is, I don't want any misunderstanding about what our attitude was towards the SEC was in this case. Just the fact that I questioned a couple of witnesses about extraneous things fairly vigorously, shouldn't obscure the fact that we feel like the SEC treated us fairly through this whole thing.

The SEC did not want Arthur Andersen to go down. The SEC had as its goal to protect investors and they knew protecting investors was inconsistent with Arthur Andersen going down. So the SEC, I think, was vigorously representing investors in this matter. Our experience is they were fairly treating us and fairly considering issues. Our quarrel is not with the SEC.

QUESTION: Mr. Andrews, (UNINTELLIGIBLE) said Andersen was already in trouble long before they ever indicted (UNINTELLIGIBLE).

HARDIN: That story, he can answer that obviously. But that statement is as uninformed as about 90 percent of the other things they said. That is not true. That is a CYA thing trying to suggest that because they ruined this company with an indictment and were told that repeatedly weeks before and said they don't care about the collateral damage, to come along now, Monday morning quarterback saying this company is going down is patently false. Other than that I don't have an opinion.


ANDREWS: Well, I mean -- I think we can address that issue based on the dates involved. As of prior to March 14, we had not had substantial client loss and we firmly believed that we had this situation in a manageable state. We had modest client losses at that point. We had met obviously with all of our clients continuously through the process and we felt comfortable with being able to move forward.

So not that there hadn't been any issues, I don't mean to suggest that. We had lost some clients in the February time period, but relatively small in numbers. It was the indictment that then triggered the substantial loss of the clients, so the indictment is a huge trigger date in terms of the effect on our business, absolutely.


HARDIN: I'm sorry, I couldn't hear you.


HARDIN: Oh, the range of punishment is a $500,000 fine and a five year probation, anywhere in those ranges the court is authorized to sentence and she'll decide what she thinks is best. OK? Anything else?

QUESTION: After you heard the verdict they came back (UNINTELLIGIBLE).

HARDIN: That surprised me, I don't have an answer -- yes, that surprised me. The question was when they came back with that answer...

WHITFIELD: You've been listening to the defense attorneys of and the partners of Arthur Andersen, the accounting firm. Eighty-nine year old accounting firm which was just found guilty by a 12 member panel jury in Houston. Guilty of obstruction of justice.

Our Fred Katayama is outside the courthouse there. He's been following this case from the very beginning. We're hearing a very defiant team here who say they are fighting for the legacy of this company. They're not done fighting even though the sentencing is now scheduled for late October.

FRED KATAYAMA, CNN CORRESPONDENT: Right, Fredricka, in fact we just heard C.E. Andrews, a senior partner at Arthur Andersen saying that the company plans to regroup although he wasn't definite about it -- he didn't have any specific plans in mind.

Throughout this case the defense has been saying that it is arguing for its legacy. If you look at Arthur Andersen as a firm, basically this is a firm that once had 26,000 employees and now has less than half. It's just more than 10,000 plus. More than 300 clients have defected from the firm. A lot of them leaving right after Andersen was indicted back in March.

One surprising development I should tell you about. The jurors were polled and all 12 jurors polled said that they voted to convict Arthur Andersen on that one count of obstruction of justice. What's surprising is they said that they all felt they agreed, they were unanimous that the same person committed the crime.

This is important because it was just yesterday that the judge made what was seen then as a crucial ruling and was seen as a big point for the prosecution, the judge ruled that the jurors did not have to all agree that the same person committed a crime so long as each person -- each juror felt that somebody did.

But according to the poll, the jurors all felt that it was the same person who committed the crime. Back to you.

WHITFIELD: All right. Thanks very much. Fred Katayama from Houston. I appreciate it.

Of course, we'll be updating you on the developing comments that are coming out of that case.




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