Auditor says she didn’t see instructions on documents to shred them
HOUSTON (AP) – An accountant on Arthur Andersen LLP’s Enron Corp. audit team said Wednesday she didn’t consider an instruction to comply with the firm’s document retention policy as a tacit order to destroy documents and keep them away from federal regulators. Jennifer Stevenson, a manager on the auditing firm’s Enron account, said in her second day of testimony at Andersen’s obstruction of justice trial that she focused on tracking transactions while throwing out old handwritten notes, drafts and other extraneous documents “not in terms of what (the SEC) would see – just in terms of completing audit documentation.”
She said Tuesday her thoughts were of all the extra work ahead of her when she learned of a Securities and Exchange Commission probe into Enron’s finances last year.
David Duncan, Andersen’s former top Enron auditor, announced the SEC inquiry into Enron finances and told his staff to comply with the policy at an Oct. 23 meeting.
He also told the staff to comply with Andersen’s document retention policy, which calls for destruction of extraneous documents not kept with final audit work papers.
Duncan assigned Stevenson and another accountant to track transactions that would figure heavily in the SEC probe, so “I knew I’d have a lot of work to do,” Stevenson said.
Richard Corgel, North American audit practice director for the Chicago-based accounting firm, testified Tuesday that the policy exists partly because casual notes, drafts and other documents not material to audit conclusions can be used out of context in court against the firm or its clients.
“I have found our clients and ourselves attacked on very small points taken out of context for which there is some 20-20 hindsight opportunity (by lawyers),” he said.
Prosecutors contend Andersen destroyed Enron-related evidence in late October and early November to thwart the SEC investigation.
Andersen says it was cleaning up its files under firm policy. All Andersen witnesses who have testified, including Duncan in a plea deal with prosecutors, said they did not think they were doing anything wrong at the time.
Chad DeJohn, a computer technician in the Houston office’s technology and risk consulting unit who also testified Tuesday, addressed an e-mail he sent in early November in which he told his staff to comply with the policy immediately. He had been designated as the unit’s point person on compliance.
DeJohn testified that he set that deadline with no pressure from superiors because he was up for a promotion and wanted to get the job done.
Under questioning from Assistant U.S. Attorney Andrew Weissmann, Corgel grew tense at times, at one point complaining the prosecutor was “probing me pretty hard.”
He repeatedly said decisions on whether to keep or destroy records were judgment calls based on the expectation of whether the documents ever would be needed.
Weissmann and Corgel also bickered over the term “smoking guns” used in several documents. Weissmann implied the phrase referred to paperwork or e-mails that could implicate Andersen for accounting mistakes, or even crimes. Corgel countered “smoking guns” meant items that could be taken out of context by defense lawyers or prosecutors.
“Mr. Weissmann, that slang term is used time to time,” said Corgel, who works in Los Angeles. “I would say our intent is that extraneous information not be saved.”
What has become routine tension between lead defense attorney Rusty Hardin and prosecutors took a comic turn Tuesday when prosecutors complained to U.S. District Judge Melinda Harmon that Hardin had passed notes to Corgel’s attorneys during the partner’s cross examination.
Hardin said he hadn’t talked to them about the case, and that the note contained a joke: “These prosecutors are a very humorless lot and they need to get a life.”
“They just proved my point, judge,” Hardin said.