- The Washington Times - Saturday, May 25, 2002

HOUSTON (AP) Prosecutors in the obstruction of justice case against Arthur Andersen LLP presented evidence yesterday that, according to them, reveals an Andersen partner on the Enron Corp. audit account evaded investigators' questions.
FBI Agent Paula Schanzle first recounted her Feb. 14 interview with Andersen manager Jennifer Stevenson, then contrasted it with a deposition given five days later by Miss Stevenson's immediate supervisor, Andersen partner Thomas Bauer.
According to Miss Schanzle, Miss Stevenson echoed testimony given earlier this week by colleague Patricia Grutzmacher. Both managers said they were told in meetings on Oct. 23 to "get in compliance" with the firm's document retention and destruction policy but were too busy with Enron auditing matters to clean up their files.
They said Mr. Bauer, a lieutenant to chief Enron auditor David Duncan, told them a few days later that complying with the policy was a high priority. The two then began preserving some papers and e-mail and destroying others until a Securities and Exchange Commission (SEC) subpoena was issued Nov. 9, Miss Grutzmacher and Miss Schanzle said.
Miss Stevenson also recalled the SEC inquiry into Enron being mentioned at an Oct. 23 meeting.
Prosecutor Andrew Weissmann then asked Miss Schanzle to read Mr. Bauer's answers from his Feb. 19 deposition, taken two days after Mr. Duncan invoked the Fifth Amendment against self-incrimination more than 300 times during an interview.
Mr. Bauer answered a barrage of questions by often saying that he did not remember several events and discussions last autumn, including conversations about document destruction and the possibility of an SEC inquiry into Andersen's records on Oct. 23.
"[Bauer] denied knowledge of events we clearly think he did have knowledge of and would have recalled," Mr. Weissmann said in a hearing outside the jury's presence yesterday morning. He accused Mr. Bauer of having a "guilty state of mind" when he was interviewed.
Prosecutors also introduced a blizzard of e-mail messages reconstructed by Andersen after they were deleted last autumn. Most of them already had been entered into evidence.
The government contends Andersen's sudden emphasis on the document policy last year was a tacit instruction for employees to wipe out sensitive material ahead of an SEC probe. Andersen says it was only cleaning up its files and getting rid of extraneous or redundant documents.
Miss Schanzle was the prosecution's last scheduled witness before defense attorney Rusty Hardin was to begin his case, which he estimated would take three to five days. In all, the government called 16 witnesses during 14 days of testimony.
Three of those witnesses, including Mr. Bauer, cited their Fifth Amendment rights in declining to testify.
The continued pattern of courtroom bickering persisted yesterday when, after jurors were excused for lunch, the sides argued over admissibility of a spreadsheet that the government hastily prepared Thursday night.
After 15 minutes or so of discussion, in which U.S. District Judge Melinda Harmon appeared to be siding with prosecutors, Mr. Hardin tried to cut matters short by offering to surrender.
"It's clear what's going to happen," he said, referring to the likelihood of Judge Harmon overruling Andersen's objection.
Judge Harmon sternly told Mr. Hardin to "please sit down," then adjourned for lunch without ruling.


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