Registered: Aug 2000
Location: ObamaNation
Posts: 17992

I guess their auditors weren't doing a good or fast enough job. Of course, CEO Lay claims he didn't know *smirk*.
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Enron Accused of Shredding Documents
Papers May Have Been Destroyed as Recently as Last Week

By MARCY GORDON
.c The Associated Press

WASHINGTON (Jan. 22) - Enron Corp. employees openly destroyed numerous financial documents long after federal securities regulators began investigating the company, according to lawyers suing on behalf of investors.

The shredding of ''hundreds of thousands'' of documents was carried out at Enron's Houston headquarters as recently as Jan. 14, the attorneys said.

''From what we have learned, destruction of evidence at Enron was open and notorious and widespread,'' one of the attorneys, William Lerach, told The Associated Press. ''They even shredded on Christmas Day.''

Lerach said he was bringing some of the shredded documents to federal court Tuesday and was demanding court custody of all relevant Enron papers.

Robert Bennett, a Washington attorney representing Enron, issued a statement saying Enron was investigating the alleged destruction of documents.

The reported shredding at Enron follows revelations over the past week and a half about document destruction at Arthur Andersen LLP, Enron's auditor.

A former Enron executive, Maureen Castaneda, says the shredding of documents at Enron began after Thanksgiving on the 19th floor in an accounting office and continued through at least mid-January, G. Paul Howes, another attorney involved in the class-action lawsuit by investors against Enron, said in court papers being filed Tuesday in Houston.

Howes said some of the shredded Enron papers ''included those clearly marked Jedi II and Chewco'' - a reference to partnerships through which Enron concealed hundreds of millions of dollars in debts because they were not included in the company's balance sheet.

The partnerships, described by lawmakers as slick financial gimmicks, were a major factor in sending the company into a nosedive and bankruptcy.

The Securities and Exchange Commission began looking into Enron's accounting practices in mid-October, after the company reported more than $600 million in third-quarter losses, and a congressional committee began asking for documents in mid-December. The SEC opened a formal investigation at the end of October, including demands for financial documents from Enron and Andersen.

Enron said in a statement late Monday that it had issued four e-mails from Oct. 25 to Jan. 14 warning employees against destroying documents, specifically those related to Enron's complex web of partnerships.

The Justice Department announced on Jan. 9 that it was pursuing a criminal investigation of Enron, which entered the biggest bankruptcy in U.S. history on Dec. 2 following a six-week downward spiral.

''We are investigating the circumstances of the reported destruction of documents,'' Bennett said.

Andersen last week fired its lead Enron auditor for destroying a voluminous amount of Enron-related documents. The auditor, David Duncan, has told congressional investigators he was just following the advice of Andersen's legal department when he directed the shredding.

Lawyers for Duncan have been seeking to delay his public testimony, scheduled for Thursday before the investigative panel of the House Energy and Commerce Committee, saying Duncan needs more time to prepare.

But Rep. Jim Greenwood, R-Pa., the subcommittee's chairman, rejected the request, arguing that Duncan ''doesn't really need to recall every detail of what he did for Enron. We're focused on the destruction of documents. We'll subpoena him if we have to.''

In an on-air interview Monday with ABC News, Castaneda, the former Enron executive, displayed one box of the shredded material which she said, ''I got ... when I was leaving work to basically use ... for packing material.

''There were ... a lot more than this,'' she said, standing next to the box. ABC was the first to report Enron's alleged destruction of documents.

Howes said Castaneda was laid off from her job as a project manager on Jan. 18 and in the weeks just prior to her departure ''there was an increase in the volume of shredding.''

The shredded papers ''filled up trash cans each week,'' she was quoted by Howes as saying. Attempts to reach Castaneda by telephone Monday night were unsuccessful.

Bennett, Enron's attorney, said that ''in October 2001 the company issued several directives to all Enron employees worldwide that all relevant documents should be preserved in light of pending litigation. If anyone violated those directives, they will be dealt with appropriately.''

Said Ken Johnson, spokesman for the House Energy and Commerce Committee: ''This whole sorry affair keeps getting uglier by the minute, and we're determined to get to the bottom of it. ... Making bad business decisions is one thing, but trying to cover up bad business decisions is another.''

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