Source: Diane Swanson, 785-532-4352 or by e-mail at swanson@k-state.edu
http://www.mediarelations.k-state.edu/WEB/News/MediaGuide/dswansonbio.html
News release prepared by: Keener A. Tippin II, 785-532-6415

Wednesday, June 1, 2005

DESPITE SUPREME COURT DECISION, ARTHUR ANDERSEN'S ACTIONS FACTOR IN ONE OF NATION'S BIGGEST CORPORATE SCANDALS SAYS K-STATE ETHICS PROFESSOR

MANHATTAN -- Don't believe the hype.

Despite a decision on Tuesday by the Supreme Court to overturn the conviction of accounting firm Arthur Andersen, a Kansas State University business ethics expert says this decision should in no way detract from the fact that the accounting firm's actions contributed to one of the biggest corporate scandals in United States history.

"We should not lose sight of the fact that when accounting firms were allowed to seek lucrative consulting contracts from the very firms they were supposed to audit, that the ensuing conflicts of interests weakened the ability of capitalism to work for the good of investors and the rest of society," said Diane Swanson, a K-State associate professor of management and von Waaden business administration professor. "In this case, massive harm resulted for employees, investors and others who trusted managers and accountants to report financial data with integrity."

Andersen officials were convicted in June 2002 of obstruction of justice over the massive document destruction relating to its work with one-time energy giant Enron. At issue for the court was whether the wording of jury instructions were improperly vague.

In an effort to prevent corporate ethics scandals like Enron and Arthur Andersen from recurring in the future, Swanson is spearheading a campaign to emphasize the importance of ethics in business education. Swanson attributes part of the recent sweep of corporate scandals to nationwide business school curriculum inadequacies. Her endeavor has earned the endorsement of more than 200 professors, ethicists and business professionals, as well as two conference boards and national and international media coverage.

Swanson said the "real news" is that a vibrant company like Arthur Andersen went so far astray as to have to appeal to the high court for a ruling in the first place.

"Companies will have to do much better than this to regain society's trust in these post-Enron day," Swanson said. "We need to remember that corporations deserve the freedoms afforded by our capitalistic system only if they accept the wide-ranging responsibilities that go along with such freedoms. Apparently, it is a lesson our society easily forgets and must re-learn with each passing wave of corporate scandals. The real crime is that this perpetual dynamic wastes an incredible amount of scarce economic resources."