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Policy was to destroy some Enron documents: Andersen

Embattled auditor Andersen said it reminded employees working on the books of fallen energy giant Enron Corp in October that it was company policy to destroy materials not part of a final audit, but the firm stopped short of saying that no inappropriate actions were taken.

Andersen in-house lawyer Nancy Temple sent an e-mail on October 12 to Andersen partner Michael Odom, who was responsible for the Houston office, and urged him to remind the team of the auditor's policy of retaining some materials related to their reviews and destroying others.

Andersen's oversight of energy giant Enron, which went from being ranked 7th on the Fortune 500 list of largest companies to a December 2 bankruptcy filing, the largest in US history, is being closely scrutinised.

The auditor admitted last week that its employees had deleted some documents related to its review of Enron's books.

"The firm policy linked to her (Temple's) e-mail prohibits document destruction under some circumstances and authorises it under other circumstances," Andersen said in a statement accompanying a copy of the October 12 e-mail and internal policy documents.

Andersen also said there were other communications but did not elaborate.

"It is important to recognize that the release of these communications are not a representation that there were no inappropriate actions," Andersen said in its statement. "We are continuing our review and we hope to be able to announce progress in that regard shortly."

A congressional aide to a committee probing Enron and Andersen has said thousands of documents were destroyed.

Andersen's policy outlines 10 points which include instructions that "only final documents will be retained; drafts and preliminary versions of information will be destroyed currently."

The policy also stated that information from electronic files will be deleted in such a way that prevents later retrieval by Andersen or third parties. It also required voice messages to be deleted monthly or sooner.

Yet the practices, which date back to February 2000, say that in cases of threatened litigation, "no related information will be destroyed."

On October 16, four days after the e-mail reminding Andersen employees to follow the policy, Enron reported its first quarterly loss in over four years after taking charges of $1 billion on poorly performing businesses.

Enron also revealed it would take a $1.2 billion charge against shareholders' equity relating to dealings with partnerships run by then chief financial officer Andrew Fastow.

Subsequently, numerous lawsuits have been filed against the company and Andersen.

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