Monday, May 06, 2002

Andersen trial opens

The Associated Press

        HOUSTON — The first criminal case to emerge from the collapse of energy trader Enron Corp. will be in the spotlight in the coming weeks as Arthur Andersen LLP goes on trial for allegedly obstructing justice by shredding volumes of Enron-related documents.

        Jury selection was to begin today in Houston federal court, presenting attorneys with distinct challenges as they tackle a case that threatens to provide the knockout punch to the embattled accounting firm.

        Christopher Bebel, a former federal prosecutor and an economic crimes expert at Shepherd Smith & Bebel in Houston, said jurors will have to decide whether people who did the shredding and deleting were acting on behalf of Andersen.

        To that end, he said prosecutors will likely seek out “managerial types” — those who shoulder responsibility at work and make tough decisions.

        The defense team will likely seek “free spirits reluctant to recognize authority who might be somewhat emotional, and therefore rest their decision on sympathies,” Bebel said.

        Andersen lawyer Rusty Hardin was denied a request last month to postpone the trial on the grounds that pretrial publicity had swayed many potential jurors to believe Andersen was guilty.

        U.S. District Judge Melinda Harmon, who earlier granted Hardin's request for a speedy trial, said publicity regarding Andersen likely wouldn't ebb.

        Bebel said jurors will come from a 13-county area that stretches well beyond Houston, meaning the case won't hit so close to home for everyone.

        “Houstonians seem to be obsessed with the Enron matter and all its tangents,” he said. “But those living in more rural areas will probably look at these events in a more balanced way.”

        Andersen is charged with obstruction of justice for allegedly destroying Enron-related audit records last year as the Securities and Exchange Commission began examining the web of accounting that may have contributed to Enron's bankruptcy.

        David Duncan, a former Andersen partner who was in charge of the Enron account, pleaded guilty on April 9 to obstruction for directing the shredding. He is expected to be the prosecution's star witness.

        Robert Mintz, a former federal prosecutor, said the government has to demonstrate that Andersen partners and employees destroyed records to keep them out of the SEC's hands.

        But they also will have to delve into the criminal probe into Enron to demonstrate the relevance of documents that were destroyed.

        “You can expect that they will, on some level, go into the allegations that sparked the investigation,” said Mintz, now a partner with McCarter & English in Newark, N.J.

        Arthur Bowman, editor of Atlanta-based Bowman's Accounting Report, an industry publication, said Andersen's hope that an acquittal could save the firm likely has been dashed by unrelenting client losses, fleeing partners and severe damage to its reputation.

        “But this is a firm that truly believes in its innocence as a firm, and apparently is willing to go to its death to prove it,” he said.

        Harmon ruled that jury selection would take a day. Attorneys are to present opening statements on Tuesday, and the trial was expected to last three weeks.


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