Andersen bickering stops...for now
Assistant testifies that fired auditor "bit her head off" when he found out about shredding.
May 31, 2002: 8:00 PM EDT
Luisa Beltran and Jennifer Rogers

NEW YORK (CNN/Money) - For once, the bickering between attorneys in the Arthur Andersen LLP criminal trial stopped while Shannan Adlong, the secretary of fired audit partner David Duncan, took the stand late Friday.

Adlong's much anticipated testimony recounted the days in October when employees in Andersen's Houston office shredded Enron Corp. documents. Duncan on Oct. 23 held a meeting with employees where he ordered staff to comply with the firm's document retention policy, though he denies directing anyone to destroy documents.

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On Nov. 8, Andersen received a subpoena from the Securities and Exchange Commission for documents related to an investigation into Enron. Adlong testified that on that day, another employee had left a pile of documents on her desk, with a note asking her to shred them. She then asked Duncan whether she should destroy the papers .

"He bit my head off," Adlong said. Duncan then said: "No, we are not supposed to shred. Who asked you to shred?"

Because Duncan had never spoken to her like that, Adlong sent out an e-mail telling support staff to "stop the shredding."

For much of Adlong's testimony, the executive assistant described her former boss as "considerate, encouraging and fun to be around," she said.

Andersen fired Duncan in January for directing the shredding of Enron documents. But before he was let go, Duncan traveled to Washington to speak to investigators. As he was leaving on the trip, he told Adlong, "I wish we had never deleted any e-mails, shredded anything because the lawyers are freaking out about it. I thought we were just following policy."

On Jan. 15, Adlong found out about Duncan's firing through a firm press release and she called the former audit partner at his attorney's office.

"No one did anything wrong," Duncan told her on the phone.

"[I] didn't do anything wrong, no one on engagement team did anything wrong. [Do not] worry about it," he told Adlong.

Adlong appeared visibly shaken throughout her testimony and burst into tears while testifying. Judge Melinda Harmon, who is overseeing the criminal case, took the opportunity to break for the weekend.

End in sight?

The Andersen trial, which concluded its fourth week Friday, has been beset by frequent arguments between attorneys and spats with Judge Harmon. But late Friday, Adlong's compelling testimony silenced the courtroom antics.

Outside the courtroom Friday, Andersen's lead defense attorney Rusty Hardin said that Adlong's testimony put a "human face on how all this happened."

"She was an incredibly compelling witness, but I don't get a vote," he added.

Adlong will continue on direct examination Monday and government attorneys will then be allowed to question her.

The Andersen defense team had been expected to close Friday but Hardin said he anticipates the firm will rest on Monday. Government attorneys can call witnesses to rebut their testimony on Tuesday and closing arguments could come Wednesday.

An innocent explanation

Earlier Friday, Hardin managed to cut a big hole in the government's case against Andersen. The Chicago-based accounting firm stands accused of destroying Enron documents while on notice of a federal investigation into the energy trader. Andersen has admitted that its employees destroyed documents related to its audit of Enron, but denied the action was part of a deliberate act of wrongdoing by the firm's top decision-makers.

Government lawyers claim the firm's sudden promotion of its document policy in October was an implicit effort to destroy documents in light of a Securities and Exchange Commission investigation into Enron.

Prosecutors allege that Andersen in-house attorney Nancy Temple sent an October e-mail referring employees to the firm's guidelines on document retention. Duncan has said the Temple e-mail spurred the shredding at Andersen.

Government lawyers claim that Temple used the policy as a ruse to get employees to destroy documents. Temple will not appear at the Andersen trial in Houston and has invoked her Fifth Amendment right against self-incrimination.

But Andersen Partner John Stewart offered a more innocent explanation.

Stewart testified Friday that he asked Temple to explain the policy. So she sent him without comment an e-mail containing a link to the policy itself. "I took it to be a courtesy," he said.  Top of page