The London office of Andersen moved to the centre of the Enron debacle when it was last night named in a US Justice Department indictment accusing the firm of 'obstruction of justice', the first criminal charges to emerge from the scandal.
The charges relate to Andersen’s mass shredding of Enron-related documents, which is alleged to have happened not only in the US but also in London.
Andersen last night admitted that documents had been destroyed in London but not by UK qualified accountants.
A spokesperson said three US staff on secondment in London had shredded the documents after being instructed by colleagues in the US.
‘This does not involve anyone in the UK practice,’ said the spokesperson.
Andersen had previously admitted that its partner in charge of Enron, and other staff at its Houston office, had shredded and deleted thousands of letters, memos and emails.
But, if Andersen in the UK is to avoid any disciplinary action, it will be crucial for the office to demonstrate that no UK qualified staff took part in the shredding.
Should Andersen face disciplinary actions, either from UK accountancy institutes, or the independent Accountants Joint Disciplinary Scheme, the most severe punishment could be the removal of the firm’s right to carry out audits.
Such a measure would undermine the firm’s ability to continue trading in the UK as clients seek alternative auditors.
If Andersen in the US is found guilty of the charges it faces a maximum fine of $500,000, but senior managers could be subject to maximum jail terms of five years.
A guilty verdict is likely to destroy the firm in the US and would leave the UK prone to breaking up, a take over or forging a future alone.