Enron Corp.’s colossal collapse cost investors millions of dollars and drained retirement savings for thousands of current and former Enron employees.

Lawrence resident Seth Finestack doesn’t think it should cost him his job, too.

Finestack, who works for the consulting side of Arthur Andersen in Kansas City, Mo., can’t stomach the thought of the financial services giant spiraling into bankruptcy because “a handful” of auditors decided to shred a few truckloads of documents related to its work with a high-flying client.

Andersen has 85,000 employees and 390 offices in 84 countries, and generated $9.3 billion in net revenue last year.

“My personal theory is that we’ll have to be the scapegoat for something that is not our fault,” said Finestack, who joined the firm 13 months ago. “We have a lot of good people, full of honesty and integrity, and yet we’re being taken down by a handful of people who worked on one client.”

Finestack, who knows of at least four other Andersen employees who live in Lawrence, isn’t the only one seeking to minimize the effect of Thursday’s federal indictment against Andersen. The Big Five accounting firm is accused of obstructing justice by shredding documents and deleting computer files associated with its audits of Enron, the energy-trading giant whose rapid implosion last year has fueled a political firestorm in Washington.

KU connection

The indictment, and events leading up to it, also are on the minds of 10 Kansas University accounting students scheduled to start jobs with Andersen late this summer.

All are watching the proceedings closely, but none has bailed out of the firm that  until Enron  had a squeaky-clean image and reputation, said Jim Heintz, director of accounting and information systems at the business school.

“I’m intrigued by the reaction of the students,” he said. “The students who have chosen to go with Andersen, they exhibit almost what I describe as an impressive resiliency. They believe very strongly in the firm. They’re very reluctant to jump ship.

“I expected our students to be aggressively examining alternatives, but I do not perceive that to be happening. I’m surprised.”

For its part, Andersen is fighting back  as much as it can. The firm is calling the federal indictment a “gross abuse of government power,” and employees such as Finestack are lining up to do what they can to quell the damage by talking up the firm’s virtues and experience to anyone who will listen.

Bailing out

But will it be enough? Friday, three Fortune 500 companies  Sara Lee Corp., Northeast Utilities and Brunswick Corp.  announced they were firing Andersen as their auditors. Earlier this month, Andersen lost Merck & Co. Inc., Delta Air Lines Inc., FedEx Corp. and others.

Back in January, officials already were speculating about the firm’s demise.

“I don’t know how they can survive,” said U.S. Sen. Pat Roberts, R-Kan., during the annual meeting of the Lawrence Technology Assn.

If convicted of obstructing justice, Andersen could face a $500,000 fine and, most important, a five-year ban on auditing public companies.

The ban would cripple Andersen beyond repair, said Heintz, who is organizing a national auditing symposium in May at KU titled “Fraud and the Audit Process.”

“Then you’re not just talking about image,” he said. “You’re precluded from doing business with firms that go before the SEC (Securities and Exchange Commission). It’s a killer.”

Andersen has been a power in the accounting world for 89 years, and as recently as last month Heintz was convinced the firm would survive because of its size and reputation.

Not anymore.

Bracing for the worst

“Today, I’m afraid my answer has tipped to there is a higher probability of them not surviving independently,” Heintz said. “I don’t know if it will be a merger or what, but if they’re gone, there will be an incredible amount of work to be done. And I’m not sure we’re ready to absorb it.”

For his part, Finestack is putting on a good face. He’s still busy working on helping his consulting clients, including First National Bank of Nebraska, take advantage of new communications technologies. He is intent on seeing Andersen emerge from the darkness of the Enron cloud, which he described as a “politically driven scandal.”

But the 26-year-old KU graduate is bracing for the prospect of change at Andersen, whatever form it takes. He knows his resume still looks good.

“The Andersen name is still pretty powerful, and it still carries a lot of weight in the business world,” he said. “Before this we had a spotless reputation. And unless you personally ran a piece of paper through a shredder in Houston, it won’t affect you.”