<h2>Enron papers destroyed after SEC probe began</h2>

By Adrian Michaels in New York
Published: January 15 2002


Andersen on Tuesday admitted its staff appeared to have shredded and deleted Enron documents after receiving a subpoena from regulators, the first strong sign that there may have been criminal activity linked to the demise of the US energy trader.

The Big Five professional services firm also said it had fired David Duncan, the lead partner on its Enron audits in Houston, and placed three partners on leave. Four others have been stripped of their management responsibilities.

Andersen, which is battling to salvage its reputation worldwide following Enron's collapse into bankruptcy, revealed that Mr Duncan had ordered the disposal of documents after the Securities and Exchange Commission had opened its probe.

Andersen says there was no consultation with others in the firm and that there had been no authorisation of the wholesale disposals. But a lawyer for Mr Duncan responded on Tuesday that his client had been properly following instructions from head office in Chicago.

Enron filed for the largest corporate bankruptcy in the US on December 2. Its demise has prompted a criminal investigation by the Justice Department and investigations by the SEC and Congress.

President George W. Bush has been trying to stop the fallout from the scandal spreading to the White House, with the energy trader's strong ties to prominent Republicans now under the spotlight.

Andersen had already been under fire for allowing Enron to account for its complicated financial structure in a way that moved activities off the balance sheet and inflated earnings.

On Tuesday, Andersen said Mr Duncan called a meeting on October 23, following which there was an organised,"expedited" destruction of thousands of Enron documents.

"The firm discovered activities including the... rushed disposal of large numbers of paper documents," Andersen said."These activities were on such a scale and of such a nature as to remove any doubt that Andersen's policies and reasonable good judgment were violated."

Andersen's criticism of its Houston staff and defence of head office in Chicago will not be the end of the matter.

Investigators from the House energy and commerce committee are scheduled to interview Mr Duncan on Friday.

Andersen admitted the disposals last week, saying it could not determine if documents had been destroyed after the SEC served its subpoena on November 8.

On Tuesday, Andersen said some documents appeared to have been destroyed after the subpoena had been received, an admission that could lead to criminal charges.

"The [disposal] activity appears to have ended shortly after the lead partner's assistant sent an e-mail to other secretaries on November 9... telling them to 'stop the shredding'," Andersen said.

"We are prepared to take all appropriate steps necessary to maintain confidence," said Joseph Berardino, chief executive.


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