Andersen officials receiving subpoenas

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Posted 7:33AM on Wednesday, January 23, 2002

WASHINGTON - Senior officials of the Arthur Andersen accounting firm are receiving subpoenas to compel them to testify to Congress about the massive destruction of Enron-related documents. Enron's own alleged shredding, meanwhile, is being investigated by FBI agents at the bankrupt energy company's Houston headquarters. Subpoenas are going to Andersen chief executive Joseph Berardino, fired auditor David Duncan, attorney Nancy Temple and risk manager Michael Odom for their testimony at a House hearing Thursday. ``No one's getting a free pass on this one,'' Ken Johnson, spokesman for the House Energy and Commerce Committee, said Tuesday. In a sprawling inquiry with both financial and political overtones, 11 House and Senate committees are investigating the Enron debacle, while the Justice Department and the Securities and Exchange Commission pursue their own less visible probes. Enron's slide into the biggest bankruptcy in U.S. history on Dec. 2 left thousands of employees out of work and stripped of their retirement savings after Enron temporarily barred them from selling company stock from their Enron-dominated 401(k) accounts. Investors around the country were burned. President Bush said he was angered that his mother-in-law, Jenna Welch, lost about $8,000 on her investment in Enron stock. ``A lot of the stockholders didn't know all of the facts. And that's wrong,'' Bush said Tuesday. The president has received large political contributions over the years from Enron Chairman Kenneth Lay, who is expected to testify before two congressional committees on Feb. 4. Bush also urged Congress not to be distracted by the Enron investigation. ``I'm confident that all the facts will come out on Enron. And I'm also confident that if Congress has the right attitude, we can get a lot done,'' he said in a pitch for his economic revival plan. Chicago-based Andersen fired Duncan last week for his role in the extensive destruction of Enron-related documents after federal regulators began investigating possible improprieties in the failed energy trader's accounting. In Houston on Tuesday, FBI agents arrived at the soaring headquarters building to look into other alleged shredding while attorneys for investors suing Enron asked a federal judge to bar the company and Andersen from destroying any more records. Enron said it had posted security guards to block employees from floors holding accounting and finance records. The judge urged attorneys for Enron and the investors to come up with a plan to protect company documents and get back to her on Wednesday. Duncan, through his lawyers, has asked for a delay in his testimony to review documents and prepare for the congressional hearing. He already has talked to committee investigators. Robert Giuffra, one of his attorneys, said Tuesday evening that no decision had been made on whether Duncan would testify. ``We have not received a subpoena,'' he said. Congress can compel witnesses to show up, but cannot force them to answer potentially incriminating questions without granting them immunity from criminal prosecution. Temple and Odom, while expressing willingness to testify, have raised concerns about protecting confidential information relating to the investigation, Johnson, the committee spokesman, said. He noted that the accounting firm's chief executive had been interviewed over the weekend on television. ``Mr. Berardino found the time to brief the American public on 'Meet the Press' on Sunday,'' Johnson said. ``He should be able to find the time to appear at a congressional hearing.'' Andersen spokesman Patrick Dorton said, ``We have not received a subpoena. We have told the committee that we would testify but the only question is when.'' A former Enron executive, Maureen Castaneda, has alleged that massive document destruction took place openly at the company headquarters starting after Thanksgiving and continuing until as recently as last week. The Securities and Exchange Commission started looking into Enron's accounting in mid-October, after the company reported a third-quarter loss of more than $600 million. The SEC's inquiry eventually included demands for financial documents from Enron and Andersen. In other developments: -Bush used his recess appointment power to put an official from another major accounting firm on the SEC, bypassing the Senate approval process. Bush appointed Cynthia A. Glassman, a principal at Ernst & Young, to fill a Republican vacancy on the five-member commission a day before Congress reconvened. Bush also reappointed Isaac Hunt, a Democrat named to the SEC by former President Clinton in 1996. Hunt's term recently expired. -Sen. Phil Gramm, one of Congress' biggest recipients of Enron campaign donations, has decided to remove himself from part of the wide-ranging congressional investigations. Gramm, R-Texas, will be absent from hearings focusing on what went wrong at Enron but will take part in more general inquiries into accounting standards, investor protection issues and other matters, spokesman Larry Neal said. His wife, Wendy Gramm, is on Enron's board and audit committee and has been named in a lawsuit by investors against Enron executives and directors. Gramm told The Dallas Morning News in Wednesday's editions that he did not know of Enron's precarious financial state in the months before the bankruptcy filing because he and his wife do not discuss her business activities. He also said he and his wife lost more than $600,000 in the Enron collapse. ``When all the facts are known, people will find she did nothing wrong,'' Gramm said. ``But this thing's going to be around for a long time.''