- The Washington Times - Wednesday, May 29, 2002

HOUSTON (AP) Arthur Andersen LLP has a policy to destroy extraneous e-mails and documents partly because they can be used out of context in court against the firm or its clients, a top Andersen executive testified yesterday.
Richard Corgel, North American practice director for the Chicago-based accounting firm, said casual notes, drafts and other documentation not material to audit conclusions should be destroyed in accordance with Andersen's document retention policy.
Plaintiff attorneys "don't always look in terms of providing a fair hearing with respect to evidence," said Mr. Corgel, the first defense witness in his firm's obstruction-of-justice trial, which is in its fourth week.
"Rather, I have found our clients and ourselves attacked [by lawyers] on very small points taken out of context for which there is some 20/20 hindsight opportunity."
Chad DeJohn, a computer technician in the Houston office's technology and risk consulting unit, testified about an e-mail he sent in early November in which he told his staff to comply with the policy immediately. He had been designated the unit's point person on compliance.
He said yesterday that he set the deadline with no pressure from superiors because he was up for a promotion and wanted to get the job done.
Prosecutor Andrew Weissmann asked Mr. Corgel about where the line would fall between material that is considered extraneous and what might be useful to government investigators or others.
Mr. Corgel, who took the stand Monday and had many less-than-cordial exchanges with Mr. Weissmann, complained that the prosecutor was "probing me pretty hard" at one point. He repeatedly said decisions on whether to keep or destroy records were judgment calls based on the expectation of whether the documents ever would be needed.
Prosecutors contend Andersen destroyed evidence related to its audit work on Enron Corp. in late October and early November because it knew some information would be damaging if uncovered by the Securities and Exchange Commission, which was investigating the energy-trading giant.
Andersen says it was merely cleaning up its files under company policy. All Andersen witnesses who have testified, including former Enron audit partner David Duncan, who made a plea deal with prosecutors, said they did not think they were doing anything wrong at the time.
Mr. Weissmann and Mr. Corgel also quibbled over the term "smoking guns" used in several documents.
Mr. Weissmann implied the phrase referred to paperwork or e-mails that could implicate Andersen for accounting mistakes, or even crimes. Mr. Corgel countered that "smoking guns" meant items that could be taken out of context by defense lawyers or prosecutors.
"Mr. Weissmann, that slang term is used time to time," said Mr. Corgel, who works in Los Angeles. "I would say our intent is that extraneous information not be saved."
When Mr. Weissmann pressed Mr. Corgel about a conversation he had in January with a co-worker who had visited the Enron audit team last October, Mr. Corgel said he remembered the colleague saying he heard a machine run all day, but he didn't recall the co-worker saying it was a shredder.
In a discussion about Enron accounting, Mr. Corgel said he began thinking the energy trading giant, which declared bankruptcy Dec. 2, probably needed to restate balance sheets around Oct. 25 because of a $1.2 billion equity reduction caused by accounting mistakes on paper entities called "Raptors."
A week later, Mr. Corgel and other Andersen accountants learned problems concerning other entities with names like JEDI, Chewco and Swap Sub were going to cause a $500 million write-down in earnings. Mr. Corgel thought Enron should have restated its finances immediately, but the company waited until Nov. 8.
Mr. Corgel acknowledged that he had planned for the Enron audit team and members of Andersen's in-house consultation unit to meet and discuss their disagreements over how the accounting issues should be addressed.
Mr. Weissmann referred to the gathering as a "kumbaya, let's hold hands" meeting.
"Mr. Weissmann, we are busy people. We do not call meetings for any kumbaya purposes," Mr. Corgel said.
What has become routine tension between lead defense attorney Rusty Hardin and prosecutors took a comic turn yesterday when prosecutors complained to U.S. District Judge Melinda Harmon that Mr. Hardin had passed notes to Mr. Corgel's attorneys during the partner's cross examination.
Mr. Hardin said he hadn't talked to them about the case, and that the note contained a joke: "These prosecutors are a very humorless lot and they need to get a life."
"They just proved my point, judge," Mr. Hardin said.
Mr. Hardin has said he hopes to wrap up his case Friday.


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