WASHINGTON (Reuters) ? The Supreme Court yesterday overturned the conviction of onetime accounting giant Arthur Andersen for destroying Enron Corp.-related documents because of flawed jury instructions.

In a defeat for the US Justice Department, the high court ruled unanimously that the instructions given by a federal judge in Houston failed to convey properly the elements of what constitutes a conviction for corrupt persuasion.

Andersen?s conviction resulted in the downfall of the company, which had been one of the ?Big Five? accounting firms. More than 28,000 US employees lost their jobs.

Andersen, which had been Enron?s longtime auditor, was convicted on a single count of corruptly persuading its employees to destroy documents in October and early November 2001, to keep them from federal investigators. The ruling, which an Andersen spokesman hailed for acknowledging a ?fundamental injustice,? does not necessarily mean the end of the case. It will be up to the Justice Department to decide whether to retry the company.

Chief Justice William Rehnquist in the opinion agreed with the company?s arguments that jurors should have been told that they needed to find the company had acted knowingly to subvert an investigation in order to be found guilty.

Under ordinary circumstances, it is not wrong for a manager to instruct employees to comply with a valid document retention policy, even though it is created in part to keep certain information from others, including the government, he said.

Rehnquist said the jury was told that even if Andersen honestly and sincerely believed its conduct was lawful, the jury could convict.

He said it was striking how little culpability the instructions required, and that the instructions diluted the meaning of ?corruptly? so that it covered innocent conduct.

The decision overturned a federal appeals court ruling that upheld Andersen?s conviction, and the justices sent the case back for further proceedings.

Acting Assistant Attorney General John Richter said the Justice Department will carefully examine the decision and will determine whether to retry the case.

?The Justice Department?s decision to charge Arthur Andersen was based at the time on the determination that the substantial destruction of documents in anticipation of an investigation by the Securities and Exchange Commission violated the law,? he said.

?We remain convinced that even the most powerful corporations have the responsibility of adhering to the rule of law,? Richter said in a statement. Andersen spokesman Patrick Dorton said the company was very pleased with the ruling. He said it acknowledged ?the fundamental injustice that has been done to Arthur Andersen and its former personnel and retirees.

?We pursued an appeal of this case not because we believed Arthur Andersen could be restored to its previous position, but because we had an obligation to set the record straight and clear the good name of the 28,000 innocent people who lost their jobs at the time of the indictment,? he said.

?This decision represents an important step in removing an unjustified cloud over the professionalism and integrity of the people of Arthur Andersen,? Dorton said.

The Andersen case represented the Justice Department?s first high-profile prosecution as part of its investigation into Enron?s collapse and its efforts to crack down on corporate fraud. Houston-based Enron was the nation?s seventh-largest public company by revenue before it spiralled into a then-record bankruptcy in December 2001.

Business groups and defence lawyers said Andersen?s conviction could set a dangerous precedent.

They said legitimate advice from company lawyers to destroy documents or routine shredding of records could be used to get a conviction without showing the defendant acted corruptly.

The issue, however, has limited importance as Congress in 2002, as part of the Sarbanes-Oxley Act, adopted legislation that makes it clear that companies must keep documents in such situations.