Thursday, May 16, 2002

Auditor suspected own crime in January

By Kristen Hays
The Associated Press

        HOUSTON — A few weeks after David B. Duncan was fired from Arthur Andersen LLP in January, he said he learned he was a target in the probe of mass shredding of Enron-related documents at the firm last year.

    NS Group Inc., the Newport tubular steel producer, has joined the list of public companies dropping Arthur Andersen LLP as its financial auditor.
    NS Group said Wednesday it picked Deloitte & Touche LLP as its independent accountant, replacing Andersen, its accountant since 1981. The move comes a day after Meridian Bioscience Inc. said it was dropping Andersen for PricewaterhouseCoopers.
    Andersen, which is struggling for survival in the face of a criminal trial for destroying documents in the Enron collapse, previously lost Cincinnati-based Cinergy Corp. and LSI Industries Inc., as well as Delta Air Lines, as major clients.
        Mr. Duncan couldn't recall who told him as he testified Wednesday during Andersen's obstruction of justice trial but said he heard it sometime in February.

        Mr. Duncan, the former Andersen partner in charge of Enron audits, maintained his innocence publicly until early April when he decided to plead guilty to obstruction after “a lot of soul searching about my intent and what was in my head at the time.”

        Before that, Mr. Duncan had claimed innocence during a three-day marathon of meetings with federal and congressional investigators Jan. 14-16, where he said he committed no crime by intentionally destroying documents to keep them out of the hands of the Securities and Exchange Commission.

        Mr. Duncan said he likely had his first inkling sometime in January that he might have done something wrong.

        Mr. Duncan kept that to himself until March. At that time, he testified, he told his family that he might be guilty of a crime, even as he continued telling federal investigators he did nothing wrong.

        The same month, Andersen was indicted on federal charges of obstruction for shredding documents and deleting computer records related to Enron.

        The indictment was unsealed March 14, and Andersen pleaded not guilty to obstruction March 20. That day, Mr. Duncan said, the firm came to him with an offer to present a united front that neither broke the law. Mr. Duncan said he signed an agreement to that effect with the firm.

        However, “right about that time, I was discussing the fact that I might have committed a crime with my family,” he said.

        Mr. Duncan testified he told members of Andersen's Enron audit team on Oct. 23 to comply with the firm's document retention and destruction policy after the SEC had begun probing the energy trader's finances.

        He, and others on the staff, started destroying what they thought were extraneous Enron documents until the firm received a subpoena from the SEC Nov. 9. Mr. Duncan said he thought it was acceptable to destroy documents until the subpoena came.


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