Justice may indict Andersen in shredding of documents

WASHINGTON -- The Justice Department has repeatedly threatened accounting firm Arthur Andersen with indictment for destroying documents in the Enron case, according to people familiar with their negotiations over the past week to 10 days.

One possible outcome of the negotiations would be for Andersen to plead guilty to obstruction of justice for the shredding of Enron-related documents at the accounting firm's Houston office last fall.

Despite Andersen's desperate situation and its need to resolve any criminal legal problems swiftly, the accounting firm is leery about pleading guilty to a crime unless it first receives assurances from the Securities and Exchange Commission, said the sources.

The accounting firm's concern is that a guilty plea could bar it from filing reports with the SEC on behalf of the companies it audits, said people familiar with the discussions.

Negotiations were continuing between the Justice Department and Andersen. U.S. officials have indicated that no formal decision is anticipated before Thursday, when Michael Chertoff, head of the department's criminal division, is back in his office from a trip with Attorney General John Ashcroft to Trinidad.

The two sides have agreed to continue discussions this week, a source said Tuesday.

Since Andersen's name is on SEC filings of all the publicly held corporations it audits, Andersen regards SEC clearance in the event of a guilty plea as vital, the people familiar with the contacts said.

The SEC had no immediate comment Tuesday; a message was left for Andersen spokesmen.

One legal expert disagreed with Andersen's position.

Duke University law professor James D. Cox saw the SEC filings as a non-issue.

"As far as bad-boy disqualifiers" for doing business at the SEC, "none of the prohibitions deal with the role that public accountants serve," said Cox, a specialist in corporate and securities law.

"If the SEC is trying to broker a settlement, which is what we keep hearing, why don't they just give Andersen the assurance?" said Cox.