The U.S. Supreme Court yesterday overturned accounting firm Arthur Andersen LLP’s conviction for obstructing an investigation into Enron, dealing a unanimous rebuke to the Bush administration’s corporate-fraud crackdown.

The court said the 2002 jury instructions were faulty because they didn’t require proof that Andersen officials knew they were doing something wrong. Andersen, now defunct, was accused of illegally urging employees to shred documents connected to its Enron audits.

The instructions “simply failed to convey the requisite consciousness of wrongdoing,” Chief Justice William Rehnquist wrote for the court in Washington. “Indeed, it is striking how little culpability the instructions required.”

The decision overturns what had been a symbol of the administration’s corporate-crime prosecutions. The indictment and subsequent conviction forced Andersen, once the world’s fifth largest accounting firm with 85,000 worldwide employees, to stop conducting public audits. The Chicago-based firm now has only 200 employees, mostly lawyers and administrators.

“It’s a tremendous vindication” for the firm and its employees, said Rusty Hardin, who served as Andersen’s lead attorney during the trial. “They never intended to do anything wrong. They certainly never intended to obstruct justice.”

The decision will have limited impact beyond Andersen, in part because the 2002 Sarbanes-Oxley Act supersedes the legal provisions at issue, corporate-crime legal experts said.

It nonetheless may help former Credit Suisse First Boston banker Frank Quattrone, who is appealing his obstruction of justice and witness tampering conviction on similar grounds. In court papers filed yesterday,. Quattrone’s attorneys said the ruling has “an important bearing” on several arguments he is raising.

Acting U.S. Assistant Attorney General John Richter said the Justice Department is disappointed by the ruling, but hadn’t yet decided whether to seek a new trial, something legal experts said was unlikely.

“I seriously doubt the government will go to the time and expense of retrying Andersen again, given what’s left of the company,” said Alan Bromberg, a securities law professor at Southern Methodist University in Dallas.

The high court ruled barely a month after hearing arguments.

“The speed with which they did this is fairly unprecedented,” said James Wareham, a corporate-crime defense lawyer at Paul Hastings Janofsky & Walker in Washington. “It was a big 9-0 because it was so rapid.”

The ruling overturns a $500,000 fine for the firm and may help Andersen’s former partners as they try to resolve civil lawsuits seeking billions of dollars.

“This could be the beginning of the end for the government’s zeal to make an example of people in corporate fraud cases,” said Robert Zito, a New York-based litigator who defends large corporations in civil and criminal cases.

Andersen was accused of persuading its employees to purge and shred tens of thousands of company records just as the Securities and Exchange Commission was preparing to open a formal investigation into Enron’s accounting. Prosecutors opted not to charge Andersen for the document destruction itself.

Enron, a Houston-based energy trader, lost $68 billion in market value in an accounting fraud that led to its December 2001 bankruptcy filing. Andersen was Enron’s auditor for 16 years.

Andersen said firm officials merely reminded employees of its long-standing “document-retention policy.” That policy called for elimination of duplicates, drafts, and notes once an audit was complete.

Andersen was indicted under a federal witness-tampering law, which authorizes 10 years in prison for someone who “corruptly persuades” another to destroy evidence.

Justice Rehnquist faulted U.S. District Judge Melinda Harmon’s instructions to the Houston jury. He pointed to a section in the instructions – urged by Justice Department prosecutors – that said Andersen could be convicted even if the firm “honestly and sincerely believed that its conduct was lawful.”

Justice Rehnquist, who announced the decision from the bench, also said document-retention policies are “common in business.”