FBI agent testifies at Andersen trial
HOUSTON (AP) – The in-house lawyer at the heart of the government’s obstruction of justice case against Arthur Andersen LLP declined to testify, so prosecutors summoned an FBI agent to give her a voice. On Tuesday, Barbara Sullivan, head of the FBI’s securities fraud unit in San Francisco, went over documents, transcripts and other pieces of evidence she had read into the record Monday, only this time under cross-examination.
Of particular interest Monday were notes taken by Andersen attorney Nancy Temple during a flurry of conference calls as accountants and auditors discussed the mounting problems of client Enron Corp. The accounting firm is charged with obstruction of justice for destroying Enron-related records as the Securities and Exchange Commission started probing the energy company’s finances.
On Oct. 9, Temple noted an SEC investigation was “highly probable,” and could lead to problems for Andersen, which had already agreed to a form of probation with the agency last summer after audit failures on Waste Management Inc.’s books.
Three days later, Temple sent an e-mail to Andersen workers reminding them about the firm’s document retention policy, which calls for destruction of unnecessary documents. The government contends it was essentially an unspoken order to obliterate Enron-related material. Sullivan told Andersen attorney Rusty Hardin that she did not begin working on the case until late March and had not personally interviewed Temple.
Hardin asked whether the lawyer’s notes specifically mentioned Andersen as a possible subject of an SEC probe.
“No, it doesn’t,” she said.
Prosecutors point to Temple’s notes as evidence the Chicago-based firm was conscious of possible SEC interest – an informal inquiry already was under way unbeknownst to them – and was desperate to avoid another audit failure because of its probation with the agency. The firm contends that Temple’s message was an innocent effort to organize papers, e-mails and computer files and get rid of extraneous material. Before her e-mail was sent, Houston-based Andersen partner Michael Odom was videotaped Oct. 10 instructing audit team managers to follow the document retention policy, saying documents could be destroyed until litigation was filed.
Odom has not testified, while Temple invoked her Fifth Amendment right against self-incrimination by mail earlier in the trial.
The call to adhere to the document-retention policy ended Nov. 9, the day Andersen received a subpoena for Enron documents. Shannon Adlong, Duncan’s executive assistant, issued an e-mail to staffers that said, “No more shredding.”