Arthur Andersen LLP (defunct)

Arthur Edward Andersen founded his accounting practice in Chicago in 1913 at age 28. The firm established a reputation for integrity that was almost legendary in the profession. In its early years, Andersen famously refused to certify the accounts of a railroad client that was misrepresenting its revenues. The client threatened to take its business elsewhere. Andersen reportedly told the client: "There is not enough money in the city of Chicago to make me do that." The client left. The story was repeated in the firm's training programmes for decades.

Through the mid-twentieth century, Arthur Andersen grew to become the most prestigious accounting firm in the United States. The firm was known for its culture of uniformity — partners across the country were expected to dress the same, speak the same, and apply the same standards. Andersen recruited from the top universities and invested heavily in training. The "Arthur Andersen way" became a benchmark that other firms aspired to match. At its peak, the firm had 85,000 employees in 84 countries.

Arthur Andersen's consulting division had grown so large and profitable that it dwarfed the audit practice. The consultants resented subsidising the auditors; the auditors resented being overshadowed by the consultants. In 2000, after years of internal warfare, the consulting division was spun off as an independent firm — Accenture. Arthur Andersen retained the audit business but lost its most profitable revenue stream. The separation left the firm financially dependent on audit work and vulnerable to a single catastrophic client failure.

Arthur Andersen had been Enron's auditor since 1985 and earned $52 million from the company in 2000 alone — split roughly equally between audit and consulting fees. When Enron's accounting irregularities became public in October 2001, Andersen employees began shredding documents and deleting emails. The document destruction was ordered by a senior Andersen partner. Investigators later concluded that tonnes of documents were destroyed in the weeks before the SEC formally requested them.

The U.S. Department of Justice indicted Arthur Andersen for obstruction of justice in March 2002. The indictment alone was fatal — major clients immediately terminated their relationships with the firm, unwilling to be associated with an indicted auditor. By June 2002, Arthur Andersen had ceased auditing public companies. The firm that Arthur Andersen had built on the principle that integrity was non-negotiable was destroyed, in large part, by the destruction of evidence. The Supreme Court later overturned the conviction unanimously, ruling that the jury instructions had been flawed. The firm was already gone. 89 days from indictment to dissolution.