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Monday, June 03, 2002

Andersen trial entering home stretch



The Associated Press

        HOUSTON — If Arthur Andersen LLP really wanted to survive the fallout of Enron Corp.'s collapse, its top partners should have tried harder to avoid the obstruction of justice trial entering its home stretch this week, a former federal prosecutor said.

        “This is not the way to handle a matter if you want your company to survive,” said Thomas Ajamie, now a securities lawyer for Schirrmeister Ajamie LLP in Houston. “None of this is good for business.”

        Andersen is charged with obstruction for shredding documents and deleting computer records related to Enron Corp. in October and November last year as the Securities and Exchange Commission began investigating the energy company's complicated accounting practices.

        Andersen claims sudden promotion of a document retention policy in that time frame that calls for destruction of extraneous papers was not, as prosecutors contend, an implicit order to thwart the SEC. The firm claims it was a routine effort to organize overloaded files.

        Lawyers for the 89-year-old firm expect to wrap up its defense case Monday. Prosecutors can present rebuttal witnesses, and then attorneys for both sides would present closing arguments before jurors begin deliberations.

        Jurors left on Friday having just watched the executive assistant of Andersen's former top Enron auditor sobbing as she recalled learning in January that her boss had been fired amid the shredding storm.

        Shannon Adlong tearfully said she called her supervisor, David Duncan, in Washington, D.C. after Andersen had announced his firing. She said he told her neither he nor the Enron audit team did anything wrong, that he didn't understand it and that she shouldn't worry about it.

        Duncan said during nearly a week of testimony earlier in the trial that he decided months later that he committed a crime, after several meetings with prosecutors and much “soul searching.” Duncan pleaded guilty to obstruction on April 9.

        U.S. District Judge Melinda Harmon then dismissed the jury for the weekend, before prosecutors questioned Adlong. She was to continue testifying today.

        A conviction would bar Andersen from auditing public clients and subject the weakening firm to a $500,000 fine and five years' probation. Talks to settle the criminal case broke down in April.

        But even an acquittal likely won't repair Andersen's continued disintegration, said Arthur Bowman, editor of Atlanta-based Bowman's Accounting Report, an industry publication.

        “An acquittal wouldn't do much, other than it would be a moral victory,” Bowman said. “A moral victory for a corpse doesn't mean much.”

        The Chicago-based company had lost 653 of its approximate 2,300 public clients — about 28 percent — by the end of the fourth week of its trial on Friday, according to the industry monitor Auditor-Trak. Its worldwide network of partners also has splintered, with entire offices bolting to join rival firms.

        Most of the client losses came after the indictment against the firm was unsealed March 14, the first criminal charge to emerge from Enron's collapse.

       



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