Thursday, March 21, 2002

Andersen pleads not guilty


Charges involve shredding Enron files

By Kristen Hays
The Associated Press

        HOUSTON — Arthur Andersen LLP pleaded not guilty Wednesday to criminal charges that it obstructed justice by shredding tons of documents and deleting computer files related to Enron Corp.

        The brief arraignment was the beleaguered Big Five auditing firm's first court appearance since a grand jury indictment was unsealed last week.

        “I plead not guilty,” Gene Frauenheim, managing partner of the Chicago-based accounting firm's Houston office, told U.S. Magistrate Calvin Botley.

        U.S. District Judge Melinda Harmon, who ultimately will hear the case, later decided that a three-week trial would start May 6.

        Andersen's attorney, Rusty Hardin, challenged the veracity of the government's evidence, saying a fast trial will help Andersen survive and save its reputation.

        He said the indictment ended talks with the Securities and Exchange Commission over a $500 million settlement to compensate investors who lost large sums when Enron collapsed last year.

        Samuel Buell, one of a team of Washington, D.C., federal prosecutors on the case, said Andersen urged Department of Justice investigators “to give Arthur Andersen a clean bill of health,” and they couldn't comply.

        Mr. Frauenheim, who entered the plea on behalf of the firm, called the charges “senseless.”

        “We would not put our clients at risk with something like that,” he said.

        The indictment against Andersen is the Justice Department's first related to Enron's collapse. The firm is accused of obstructing justice by shredding tons of documents and deleting computer files related to Enron audits.

        The indictment said high-level Andersen management officials held a conference call to discuss the onset of an SEC inquiry of Enron in October. Dozens of trunks were obtained to haul paper from Andersen's offices in the Enron building to the auditing firm's Houston office for shredding, according to the indictment.

        “Tons of paper relating to the Enron audit were promptly shredded as part of the orchestrated document destruction,” the indictment said.

        The indictment also alleged Enron documents were destroyed by Andersen personnel in Chicago, London and Portland, Ore.

        Andersen, Enron's auditor for 16 years, acknowledged in January a “significant but undetermined” amount of Enron-related documents had been destroyed at its Houston office. Enron fired Andersen shortly thereafter.

        No individuals were indicted even though Andersen has sought to blame the accounting scandal on its lead Enron auditor, David Duncan, and others in its Houston office.

        Mr, Duncan was fired shortly after that acknowledgment and is cooperating with investigators.

       



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