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Lawyers want statements in Andersen-Enron case

Lawyers in a massive Enron Corp shareholder lawsuit on Wednesday argued over whether six key Andersen employees can be deposed early, leaving a judge to decide how to preserve evidence in the case.

US District Judge Melinda Harmon said she would rule "quickly" on the two proposals brought to her by a group of plaintiffs suing auditor Andersen and Enron's top directors and officers. She did not give a specific date.

A consolidated group of plaintiffs asked Harmon to allow them to depose six current or former Andersen employees who have been identified as having a role in the destruction of Enron documents after a US Securities and Exchange Commission probe was launched in October.

Andersen, joined by lawyers who are suing them on behalf of the New York City and state of Florida pension funds, opposed the deposition request, which would waive a provision of US securities law that delays depositions until a judge determines if a suit is frivolous or not.

The six employees include Andersen's former top partner on the Enron account, David Duncan, who was fired January 15 for ordering the destruction of Enron documents, Andersen said. Four other Andersen partners in Houston who were relieved of their management responsibilities and a lawyer who sent an e-mail explaining Andersen's document destruction policy to the auditor's Houston office make up the rest.

Duncan's attorney Robert Giuffra said his client would assert his Fifth Amendment right against self-incrimination during at a hearing before the US House Energy and Commerce Subcommittee on Oversight and Investigations scheduled for Thursday.

Pennsylvania Democratic Rep James Greenwood, who chairs the panel, noted that a January 15 Andersen press release said Duncan ordered expedited destruction of Enron-related documents on October 23.

"We know that he had 80 people involved in this account. We know that he directed them to go through their files and destroy documents," Greenwood said.

Greenwood said he wanted to know is "how this many employees would, as Andersen says, destroy documents at Duncan's direction contrary to the company's policy without blowing the whistle."

FRESH IN THE MINDS

Andersen attorney Rusty Hardin said early depositions would interfere with multiple governmental and congressional investigations, including a criminal inquiry by the Justice Department and the SEC probe.

"There is simply no legitimate reason that the stay should be lifted for those six people," Hardin said.

Plaintiff's attorneys argued that the contents of the destroyed documents would be fresh in the minds of those people.

"We need to preserve the memory of those documents that have been destroyed before they are lost," attorney Rob Harrison, who represents participants in Enron's 401k plans, said.

Another attorney accused Andersen of trying to preclude the depositions as a way to slow down other inquiries.

"We don't think the schedule of litigation should be disrupted by Andersen's desire to control the progress of the criminal or SEC investigations," plaintiff's lawyer Bill Lerach said. Lerach is a partner in Milberg, Weiss, Bershad, Hynes & Lerach, one of the most aggressive shareholder litigation firms in the US.

But the parties on both sides of the case agreed to allow Andersen lawyers to guard the documents at their own sites and agreed to allow inspection of those sites immediately. Andersen will also categorise and report the documents they have found or recovered, and will update the parties as necessary, the motions from both sides say.

The allegations of document shredding at Andersen and then Enron greatly mobilised plaintiffs' attorneys, who are anxious to preserve as much evidence as they can in what is certain to be a lengthy lawsuit.

Former Enron executive Maureen Castaneda, in interviews with attorneys and in media accounts published this week, said she witnessed document shredding at Enron's accounting department that began in October and lasted through at least January 14.

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