Justice, Andersen expected to announce settlement

WASHINGTON -- Federal prosecutors will defer pursuing criminal obstruction charges against Arthur Andersen LLP in a settlement requiring the accounting firm to admit it knew employees were wrongfully destroying documents related to the Enron Corp. collapse, people familiar with the ongoing negotiations say.

In the settlement, still being finalized, Andersen also must cooperate fully with the Justice Department's investigation of Enron's bankruptcy, these people told The Associated Press, speaking on condition of anonymity.

The most significant provisions of what was described as a "global settlement" on the criminal obstruction charge facing Andersen already have been resolved, though some details still were being worked out. The sides expected to announce the deal today in Washington, these people said.

The agreement could result in a deferral from prosecuting Andersen for as long as three years. Andersen's lawyers were uncomfortable with a deferral lasting that long, but the Justice Department was concerned that it wasn't close yet to filing any criminal charges against Enron, people close to the negotiations said.

The agreement comes after weeks of intense, secret negotiations between the Justice Department and Andersen in the wake of the firm's criminal indictment, which was unsealed March 14. Talks intensified after last week's plea agreement with David B. Duncan, the former senior Andersen auditor on the Enron account.

In the indictment, the grand jury accused Andersen of destroying "tons of paper" at its offices worldwide and deleting enormous numbers of computer files on its Enron audits.

Duncan pleaded guilty April 9 to destroying documents related to Enron's collapse. He agreed to cooperate with federal prosecutors and remains free until his sentencing in August.