- The Washington Times - Friday, January 18, 2002

The chairman and ranking member of a House committee investigating Enron Corp. yesterday asked the company's former accounting firm, Arthur Andersen & Co., for more records of its discussion on whether to dump financially troubled Enron as a client.

In a letter to Andersen CEO Joseph F. Berardino, Rep. Billy Tauzin, Louisiana Republican and chairman of the House Energy and Commerce Committee, along with the panel's top Democrat, Rep. John Dingell of Michigan, said committee investigators had uncovered new Andersen documents that "raise additional questions."

Meanwhile, committee lawyers yesterday interviewed Enron officials in Houston and will continue to question others today, including the firm's chief accounting officer, Rick Causey.

The lawyers also are "fanning out throughout the country," according to committee spokesman Ken Johnson, to learn more about the destruction of Enron records by Andersen auditors, which has put the Chicago-based accounting firm in the middle of a growing scandal.

Enron's attorney Robert S. Bennett announced yesterday that the firm had fired Andersen, saying it was "very troubled" by the document destruction.

Andersen has acknowledged that Enron records were ordered destroyed just a few days after the firm first received a request for information from the Securities and Exchange Commission about Enron's financial filings.

The documents that the committee now seeks include:

•A Feb. 6 e-mail to David B. Duncan, Andersen's chief auditor who was fired for the Enron document destruction, and Thomas Bauer, another Andersen official, concerning a meeting by the accounting firm's auditors in which they discussed whether "to retain Enron as a client."

•An Aug. 21 memo from Andersen auditing partner James A. Hecker to an in-house file noting that Enron Vice President Sherron Watkins had told him she was concerned about Enron's accounting practices. Mrs. Watkins already had alerted Enron Chairman Kenneth L. Lay, saying she was worried the company might "implode" because of its faulty accounting practices.

On Wednesday, committee investigators questioned Mr. Duncan and, according to sources close to the probe, blamed lawyers at Andersen for the shredding of thousands of Enron documents.

In more than four hours of questioning, Mr. Duncan said he was just following orders when he put into motion the "expedited" destruction of Enron e-mails and accounting documents, according to the sources.

Mr. Duncan told committee investigators that lawyers at the accounting firm began to emphasize in-house policies that allowed the destruction of records following meetings by Andersen executives in August and September that focused on Enron's financial problems.

Enron filed for Chapter 11 on Dec. 2, the largest corporate bankruptcy in U.S. history.

Mr. Duncan, according to the sources, said Andersen's lawyers began talking about company document-destruction policies in September and that it was "unusual" for the Andersen legal team to discuss those guidelines with company auditors.

The "expedited" document shredding began Oct. 23. The shredding continued until Nov. 9, the day after Andersen received an SEC subpoena for Enron documents. On that day, Mr. Duncan's assistant sent an e-mail to other secretaries in the Houston office directing them to "stop the shredding," the company said in a statement.

Andersen has denied any wrongdoing, saying in a statement that it is "committed to getting the facts, and taking appropriate actions in the Enron matter."

The Enron scandal began last fall when the Houston-based energy giant said its financial statements since 1997, as certified by Andersen, had overstated the company's profits by $586 million because of improper accounting for shell corporations or partnerships set up by company officers to mask liabilities.

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