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Enron Chief Quits As Probe Continues

January 24, 2002

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WASHINGTON (AP) _ Congress is pressing its investigation into Enron Corp.’s stunning collapse by trying to sort out conflicting accounts of document shredding at the energy company’s outside auditing firm.

Rep. Billy Tauzin, R-La., said Thursday that the committee has evidence that Arthur Andersen LLP officials ``were quite aware of the problems at Enron early on″ and began destroying files.

``That may amount, not only to impeding our investigation, but, even potentially, to obstruction of justice charges,″ Tauzin, chairman of the House Energy and Commerce Committee, said on ABC’s ``Good Morning America.″

But a key witness, David Duncan, the Andersen auditor who handled the Enron account, isn’t talking publicly without immunity from prosecution, though he met for more than four hours with House investigators last week.

Duncan, one of four Andersen executives planning to appear before the Energy and Commerce investigations subcommittee on Thursday, will ``rely on his constitutional right not to testify″ under the Fifth Amendment, one of his lawyers said.

As the House panel pursued the document destruction at Andersen, the Senate Governmental Affairs Committees planned to question former regulators and other experts on whether the government failed to exercise proper oversight of Enron.

The Securities and Exchange Commission started looking into Enron’s accounting in mid-October, after the company reported a third-quarter loss of more than $600 million. The agency’s inquiry eventually included demands for financial documents from Enron and Andersen.

Enron’s slide into the biggest bankruptcy in U.S. history on Dec. 2 left thousands of employees without jobs and their retirement savings all but gone because the funds had been tied largely to now-nearly worthless Enron stock. Other investors and creditors also have lost hundreds of millions of dollars.

At least 11 congressional committees plan hearings on the collapse of what once was the nation’s seventh-largest corporation.

The Enron case also is causing political anxiety at the White House because of Enron Chairman Kenneth Lay’s close ties to President Bush and the company’s free flowing contributions to the Bush campaign.

Late Wednesday, Lay announced in Houston that he was resigning as chairman and chief executive of Enron, a decision urged by the company’s board and its creditors.

While reports emerged this week of document shredding at Enron’s Houston headquarters as well, the focus of the House subcommittee, for the time being, is on the destruction of Enron-related papers at Anderson at a time last fall when the energy giant was descending toward bankruptcy.

Last week, Andersen fired Duncan because of his role in Enron-related document destruction in October and November, just as Enron’s problems were publicly emerging and the SEC began a formal investigation.

But Duncan has claimed to investigators that he was following company guidance on document destruction laid out in an Oct. 12 e-mail from Andersen corporate attorney Nancy Temple at the firm’s Chicago headquarters.

Temple and Dorsey Baskins Jr., managing director of Andersen’s professional standards group, were expected to be quizzed by the House panel as to why the memo was written and on the firm’s normal paper shredding policies. The company claims the Temple memo was routine and aimed only to combat the ``pack-rat″ mentality of many accountants.

Duncan’s interpretation of the Oct. 12 memo reflected a sinister view, one supported by another Andersen manager, Michael C. Odom, who also has told investigators he viewed the memo as unusual. He also has been subpoenaed to testify.

And a new Andersen document, obtained from committee sources Wednesday, also suggests the Temple directive was more than routine. In the Oct. 24 memo from a manager, employees were told the document shredding was so important that it should be pursued even ``on an overtime basis, if necessary for the remainder of this week or for however long it takes.″

Investigators also may question Temple about a warning by Duncan last October that Enron’s explanation for huge third-quarter losses might be misleading investors. Duncan expressed his concerns to Enron officials on Oct. 15, a day before the losses were announced with no change, according to several memos made available by the House subcommittee.

But if lawmakers had hoped to hear from Duncan, they have been disappointed.

Robert Giuffra Jr., one of Duncan’s attorneys, informed the subcommittee Wednesday that the Duncan has not had time to prepare, has not had access to critical documents and will testify only if given immunity _ as is his right under the Fifth Amendment.

``Mr. Duncan seeks the full disclosure of the truth″ and will continue to cooperate with the congressional investigations as well as those by the Justice Department and the SEC, Giuffra wrote.

Kenneth Johnson, a spokesman for the full committee, said the panel did not want to impede a criminal investigation at the Justice Department, so it rejected the immunity request as well as a request by Duncan that he not be required to appear.


On the Net: Enron Corp. site: http://www.enron.com

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