Andersen, Enron’s one-time auditor, was convicted on a single count of ordering employees to destroy documents deliberately to keep them out of the hands of federal investigators looking into the collapse of Enron. The conviction destroyed the firm and led to 28,000 professionals losing their jobs, pensions and livelihoods.

Frank Quattrone, the former Credit Suisse banker convicted on charges that he obstructed justice by ordering staff to destroy files needed for a federal inquiry into allocation of “hot IPO” stocks, seized on the Andersen ruling to try to bolster his appeal. Lawyers for Quattrone, who faces up to 25 years’ jail, last night faced a deadline to lodge a final written appeal of his conviction. But his legal team asked for an extension till Friday so they can consider the Andersen ruling’s “important bearing” on his case.

Chief Justice William Rehnquist announced yesterday that the Supreme Court unanimously overturned the Andersen conviction because the judge at the trial had wrongly instructed the jury.

The reversal is embarrassing to the US Justice Department and to President Bush because both had applauded Andersen’s conviction as proof that the US Government was fighting white-collar crime. Andersen was convicted because it destroyed five tonnes of Enron documents before an inquiry into the fraud began.

The jury was told it could convict Andersen even if the accountants were not aware that shredding the documents could be unlawful. Chief Justice Rehnquist ruled that the instruction was incorrect and that the firm could be convicted only if it knowingly broke the law when the documents were destroyed.

John Richter, the acting assistant attorney-general, said that the Justice Department would consider whether to prosecute Andersen a second time. “We remain convinced that even the most powerful corporations have the responsibility of adhering to the rule of law,” Mr Richter said. “We will carefully examine today’s decision.”

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