Brand Failures

People failures 187
67 Arthur Andersen
Shredding a reputation
If the Enron scandal proved anything, it was the interconnected nature of the
modern business world. After all, Enron had a lot of corporate connections,
particularly in its home state of Texas. ‘Within two or three degrees of
separation, virtually everybody would have a connection to Enron,’ said
Richard Murray, director for the University of Houston’s Centre for Public
Policy.
However, while the Enron association has had a negative impact on the
Texan corporate community, for those firms directly involved with Enron’s
day-to-day business practices, the result has been catastrophic. For Enron’s
accountancy firm, Arthur Andersen, the association has proved fatal.
After all, if it was about anything the Enron scandal was about accountancy.
Specifically it was about shredding documents relating to Enron’s
accounts and concealing massive debts, a fact that immediately implied a
considerable element of complicity on the part of the accountancy firm. This
complicity was implied further when David Duncan, Enron’s chief auditor
at Andersen, appeared involuntarily at the first investigation into the scandal
and then refused to speak in order to avoid incriminating himself. Even when
Joseph Berardino, Andersen’s chief executive, vigorously defended his firm’s
role in the affair, he was unable to undo the damage. Once it was found guilty
of deliberately destroying evidence, the firm suffered severe brand damage
and the tremors were felt throughout the entire accountancy industry.