U.S. District Judge Melinda Harmon handed Arthur Andersen LLP the maximum sentence in Houston on Wednesday — five years probation and a $500,000 fine — for obstructing justice in its handling of Enron Corp.-related documents that stymied a federal investigation of the company’s finances. Although it seemed minuscule when compared to the substantial market damage caused by the Enron scandal, the punishment was the harshest allowed under law. Andersen attorneys said they would appeal.

Andersen had been accused of shredding Enron documents in late 2001 to hinder an investigation by the Securities and Exchange Commission (SEC). A sentence of probation means that Andersen may face more fines and extended probation if it violates the terms given by Harmon. The former Big Five accounting giant has been reduced to less than 1,000 of its 28,000 employees, and has lost almost all of its former clients. The criminal trial of the firm was the first to emerge after Enron’s bankruptcy.

“Andersen’s conduct in obstructing the Securities and Exchange Commission investigation of Enron, we submit, contributed to — contributed to significantly — the historic shaking of the foundations of our markets,” said prosecutor Sam Buell before sentencing.

Jurors had said that they were convinced of Andersen’s culpability after former Andersen auditor David Duncan, who was in charge of the Houston-based Enron account, testified that Andersen’s in-house attorney Nancy Temple had told him to remove a sentence and her name from a memo regarding Enron’s Oct. 16, 2001 earnings release, which contained some of the write-offs related to Enron’s special purpose entities. No other Andersen employees have been charged by federal officials. Many, however, face numerous lawsuits.

Duncan was fired by Andersen in January, after he publicly acknowledged that Enron documents had been destroyed. He later pleaded guilty to obstruction of justice, and agreed to cooperate with federal officials in exchange for immunity from other possible crimes and the recommendation of a lighter sentence. Duncan is scheduled to be sentenced in January 2003.

Following the sentencing, Rusty Hardin, who represented Andersen, said the company still thought that the employees had committed no crimes. “Our company should not have been destroyed because of the conduct of some individuals the government disagrees with,” Hardin said. “Regardless of that, it has happened now and Andersen has to live with that.”

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