The executive counsel of the Joint
Disciplinary Scheme, Chris Dickson, has finally put to bed any
potential UK-based disciplinary proceedings that stem from the
largest corporate fraud of the 21st century. Dickson published two
reports, which cleared the staff of Arthur Andersen (Andersen) UK,
the former auditor of Enron operations in the UK, and Lord Wakeham,
a former non-executive director of the US energy giant.

Enron went into bankruptcy at the end of 2001 after it was
discovered a large-scale accounting fraud had severely distorted
the energy company’s financial condition. Enron auditor Andersen US
was indicted in Texas for obstructing justice, specifically for
destroying documents. In June 2002, the US firm was convicted by a
jury, fined $500,000 and put on probation for five years, by which
time it had dissolved.

In the US indictment, it was alleged documents were also
destroyed by Andersen’s UK firm in London, the catalyst of a
six-year investigation to ascertain the role UK chartered
accountants may have played in the scandal. However, the Joint
Disciplinary Scheme’s executive counsel has found no evidence that
Andersen’s UK firm or its staff destroyed any of the documents in

Lord Wakeham, a former Conservative cabinet minister in the UK,
was a member of Enron’s audit committee and a key part of its
corporate governance arrangements. He was the only professional
accountant on the committee but has now been cleared of any UK
disciplinary action by the Dickson report.

The executive counsel recommended against pursuing Wakeham, a
fellow of the Institute of Chartered Accountants of England and
Wales, because the case had been investigated in the US and neither
the Securities and Exchange Commission nor the Department of
Justice saw fit to bring any proceedings against any non-executive
director. For the counsel to further investigate would require
finding fresh evidence and investigators have no power to compel US
witnesses to co-operate. Therefore, Dickson concluded it was not in
the public interest to pursue the investigation.

However, lessons can still be learned. The executive committee
believes there is a need to clarify the duties and responsibilities
of accountants who act as non-executive directors. It has written
to UK professional bodies urging them to issue guidance.

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