Question

Read the ethics case on pp. 125-126. Do you think it was fair for the government to destroy an entire company because of the misdeeds of some of its members, or had Andersen become such a serious offender that such an action on the part of the government was justified?

Answer 1

It was fair for the government to destroy the company given the circumstances at the time. We could argue that maybe legal action could have been taken against the individuals who were involved in the accounting scandals. However, the fact that the company had been engaging itself in businesses that had serious conflict of interest issues for a very long time leading to the collapse of several big companies had made Arthur Andersen a big offender.
The government should not also be faulted for taking down the company since Arthur Andersen’s management had been arrogant even after being at fault. The U.S Justice Department was willing to explore some settlement option if the company was ready to cooperate with the authorities. Nevertheless the company’s management failed to consider this option. Thus, the government’s action against them was justified.