May 7, 2002 3 min read

By Kristen Hays Associated Press Writer

HOUSTON (AP) – Arthur Andersen LLP went on trial for its life Monday, charged with obstructing justice by shredding documents related to the collapse of energy giant Enron Corp.

A conviction in the first criminal case to emerge from the Enron debacle could provide the knockout punch to the Chicago-based accounting firm that already has been plagued by bolting clients, fleeing partners, forced layoffs and a damaged reputation.

Prosecutors said if jurors determine one Andersen employee destroyed documents to thwart government investigations on the firm’s behalf, that’s enough to secure a conviction.

“It’s not a defense to come to court and say, ‘Well, just a few people did this and there are thousands of people who are innocent,”‘ Assistant U.S. Attorney Matt Friedrich told the 106 potential jurors summoned to a Houston courtroom on Monday.

From that pool, 12 were being picked to decide Andersen’s guilt or innocence. After the morning session, U.S. District Judge Melinda Harmon excused seven jurors who said they could not be fair to Andersen because of their feelings toward the Enron scandal.

Friedrich referred to one employee – David Duncan – while questioning potential jurors. He said jurors will hear from a former Andersen partner who has pleaded guilty to committing a crime in order to benefit the company.

Duncan pleaded guilty April 9 to obstruction of justice for directing shredding to keep documents from federal regulators at the Securities and Exchange Commission. He was fired in January shortly after Andersen publicly acknowledged the shredding.

Andersen’s lawyer, Rusty Hardin, said no last-minute settlement even was attempted. “There will be a trial,” he said, and added that he believed he could get a fair hearing.

Hardin said the outcome of the case is “critically important” to the thousands of Andersen workers who face joblessness if the firm disintegrates.

“I don’t think there’s going to be any evidence in this case that people destroyed documents to keep them away from the police,” Hardin said.

Other potential prosecution witnesses, according to Friedrich, include:

-Nancy Temple, an in-house lawyer for Andersen in Chicago who sent an e-mail to the firm’s Houston office in mid-October reminding workers of the company’s document retention and destruction policy. Temple told Congress in February she did not instruct anyone to destroy Enron documents.

-Carl Bass, a partner in Andersen’s Houston office who was removed from Enron’s account at the energy trader’s request in March 2001 when he objected to some financial deals that later helped cause Enron’s downfall.

-Michael Odom, an Andersen partner on the Enron account who received Temple’s e-mail and later was relieved of management duties.

-Sharon Thibault, who was in charge of overseeing document shredding at Andersen and noticed a higher volume of documents being brought in trunks from the firm’s office at Enron’s headquarters in October and November.

Andersen is charged with obstruction of justice for destroying Enron-related audit records from Oct. 10 through Nov. 9 last year as the Securities and Exchange Commission began examining the web of accounting that may have contributed to Enron’s bankruptcy.

The maximum penalty Andersen could face if convicted is a $500,000 fine and five years’ probation. It additionally could be fined up to twice any gains or damages the court determines were caused by the firm’s action.

Harmon expected attorneys to give opening statements on Tuesday. The trial was expected to last at least three weeks.