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News
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Andersen's share of Enron scandal grows
graphic January 15, 2002: 3:09 p.m. ET

Firm fires lead partner on Enron audit, charging he destroyed documents after SEC request.
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  • Attorney: Enron execs cooked books -- Jan. 14, 2002
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  • Andersen
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    NEW YORK (CNN/Money) - Accounting firm Andersen said Tuesday it has fired the lead auditor for Enron Corp. and placed three other partners on leave, based on its investigation into the disposal of Enron documents.

    Andersen said lead partner David B. Duncan called a meeting on Oct. 23  to organize the "expedited effort to dispose of Enron-related documents," after Duncan learned of a request from the Securities and Exchange Commission for information about Andersen's financial accounting and reporting.

    The company said most of the destruction of e-mail and other documents took place in the days after the meeting and stopped shortly after Andersen received a subpoena from the SEC.

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      graphic Andersen fires lead Enron auditor. CNNfn's Chris Huntington reports.

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    On Nov. 9 an assistant to the lead partner sent a letter directing other secretaries to "stop the shredding," Andersen said.

    The company stressed that the effort to destroy documents "was undertaken without any consultation with others in the firm" and as far as it knows, the actions were not authorized.

    But a spokesman for Duncan told CNNfn Duncan did nothing wrong but was following instructions from an Andersen lawyer.

    "Mr. Duncan is cooperating with all investigations of this matter," the spokesman said. "He did nothing wrong. He properly followed the instructions of an Andersen in-house lawyer in handling documents."

    Duncan will meet with congressional investigators on Wednesday, according to a spokesman for the U.S. House Energy and Commerce Committee.

    "Mr. Duncan will be meeting with our investigators tomorrow," spokesman Ken Johnson told Reuters. The panel has been probing Andersen's role in the collapse of the energy trading company last fall.

    "Frankly, now that he's been fired, he may be a little more motivated to be cooperative," Johnson said. "Prior to being terminated, he delivered six boxes of personal files and records to the committee and we're in the process of reviewing them right now."

    Andersen said in its review it has discovered "the deletion of thousands of e-mails and the rushed disposal of large numbers of paper documents" on such a scale and nature "as to remove any doubt that Andersen's policies and reasonable good judgment were violated."

    Andersen CEO asked to clarify testimony

    Late Tuesday, the chairman of the House Financial Services Committee, Michael G. Oxley, D-Ohio, called on Andersen CEO Joseph F. Berardino to correct or clarify any inaccuracies in the testimony he gave on Dec. 12.

    Oxley said in a letter that a spokesman for Berardino said the Andersen CEO's testimony was "truthful but based on incomplete information" and would have been different based on what Andersen knows now.

    "I want to give you an opportunity to clarify your testimony in light of this recently discovered information," Oxley wrote. "As you know providing false testimony to Congress is a serious matter and this Committee will take all necessary steps to preserve the right of the American people to full and accurate information."

    Andersen also said an e-mail sent by an in-house Andersen lawyer on Oct. 12 did not authorize Duncan's actions.

    Time magazine first reported an Oct. 12 memo allegedly directed employees of the firm to destroy all but the most basic "work papers" related to their auditing of Enron.

    But Andersen said late Monday the Oct. 12 e-mail was referring to uncompleted work for Enron's third quarter and the author "never told the audit team they should destroy documents for past audit work that was already completed." The memo, written by in-house Andersen lawyer Nancy Temple and sent to Andersen partner Michael Odom read: "Mike -- It might be useful to consider reminding the engagement team of our documentations and retention policy. It will be helpful to make sure that we have complied with the policy. Let me know if you have any questions."

    Andersen said no "work papers" -- principal record of the work done and the conclusions reached on significant papers -- have been destroyed.

    But the company is still looking into the destruction of e-mails and documents after they were subpoenaed by the SEC.

    Andersen also said it is putting new management in charge of its Houston office.

    "We promised to be forthright and to take action where appropriate," said Joseph F. Beradino, Andersen managing partner and CEO, in a statement. "This was a painful decision, but it was absolutely the right thing to do."

    Separately, the New York Stock Exchange said Enron stock would no longer trade on the exchange. The stock closed at 67 cents a share last Thursday, the last day it traded. It had traded as high as $84 a share during 2001.

    "The exchange has determined that the company securities are no longer suitable for trading on the NYSE," NYSE spokesman Ray Pellecchia said. The NYSE also indicated it would move to formally delist the stock from the exchange, but the company could appeal that decision. graphic


    -- from staff and wire reports

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    Attorney: Enron execs cooked books -- Jan. 14, 2002

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