U.S. Rejects Andersen’s Proposal

The Justice Department rejected a settlement offer that accounting firm Arthur Andersen made to avoid a trial on an obstruction of justice charge, a lawyer for the firm said Thursday.

The rejection was received late in the day, Rusty Hardin said. “We are now preparing for trial,” he said.

Hardin had sent a letter to the Justice Department on Wednesday restating Andersen’s position in the negotiations when talks broke off last week. Andersen, Enron Corp.’s former auditor, is accused of destroying documents that might have interested Securities and Exchange Commission investigators.

Before talks broke off, Andersen had agreed to publicly admit wrongdoing in the destruction of documents, people familiar with the matter had said.

Justice Department spokesman Bryan Sierra declined to comment.

Chicago-based Andersen, which has lost more than 225 U.S. audit clients this year, is struggling to stem its disintegration. The accounting firm agreed Wednesday to sell most of its risk-consulting business to staffing company Robert Half International Inc.

Trial is set for May 6 in Houston. There is a pretrial hearing planned for today.

The New York Times reported Thursday that the Andersen letter offered fewer concessions than prosecutors were seeking when settlement talks broke down.

Two federal grand juries are investigating whether fraud contributed to Enron’s collapse in the biggest bankruptcy in U.S. history.

The government’s probe of possible criminal wrongdoing at Andersen has expanded to include Nancy Temple, an Andersen in- house lawyer, people familiar with the matter said.

Temple sent a memo to Andersen auditors working on Enron’s books in October, reminding them of the firm’s document destruction policy.

She has been told she’s under criminal investigation by the Justice Department, the Wall Street Journal reported.