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Shred of Evidence

Learn a lesson from Arthur Andersen: Destroying documents makes you look bad.

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This story appears in the December 2002 issue of Entrepreneur. Subscribe »

When the Enron scandal was heating up, two accountants at Arthur Andersen worried about memos and records that could implicate the firm. Suspecting a coming investigation, they geared up an existing company policy of destroying all documents not directly related to the final audit report. Soon, the company was shredding documents and deleting e-mails right and left.

That was a phenomenally bad idea. Investigators didn't buy the explanation that the firm was merely following its own document-retention policy. Whatever trouble the firm might have faced over turning a blind eye to the financial shell games played by its biggest client, destroying evidence made it far worse. The Justice Department indicted the firm for obstruction of justice. Clients fled, and one of the five biggest accounting firms in the world essentially died. There's a lesson in this for businesses large and small.

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