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Jury selected in Andersen criminal case

A jury to decide whether accounting firm Andersen obstructed justice by shredding thousands of Enron Corp documents was selected on Monday in the first criminal trial to emerge from Enron's collapse into bankruptcy.

Attorneys were set to make opening arguments on Tuesday in the high-stakes case that could determine Andersen's future and affect the government's far-flung Enron investigation.

The jurors, who include nine men and seven women, were selected from a pool of 106 people after day-long questioning from attorneys and US District Judge Melinda Harmon at the US courthouse in downtown Houston.

In remarks to the jury pool, lawyers hinted at their trial strategies, with Andersen attorneys playing up the normality of document shredding in the business world and prosecutors highlighting its potential illegality.

"Is there anyone who has been asked to shred documents at work?" asked assistant US District Attorney Matt Friedrich.

"Is there anyone who has been asked to shred documents at work to keep them away from police?," he asked, getting a response of "no" to both questions.

"How many of you are in businesses that regularly destroy documents?" Andersen attorney Rusty Hardin asked, to which about a quarter of the panel raised their hands.

"Well, are you all committing a crime?"

Prosecutors said they would call more than 50 Andersen employees to the witness stand to make the case that the accounting giant destroyed evidence showing that Enron was cooking its books with the blessings of Andersen, its auditor.

The government's star witness will be David Duncan, Andersen's lead Enron auditor, who last month pleaded guilty to obstruction of justice and agreed to cooperate with prosecutors in exchange for a lighter sentence.

Andersen, which was indicted in March, sought a speedy trial in order to clear its name rapidly and prevent its collapse. It has lost more than 300 clients since the Enron saga began last fall.

Enron filed bankruptcy on December 2, 2001 amid revelations that it had used off-balance-sheet deals to hide billions of dollars in debt and inflate profits.

ROLLING THE BONES

The stakes could not be higher for Andersen, whose future hangs on the verdict, nor for the US Justice Department, which is banking on an easy first conviction to propel forward its sprawling investigation of Enron's disastrous fall.

A guilty verdict is seen as fatal, since Andersen would be barred from auditing public companies without a waiver from the US Securities and Exchange Commission.

An acquittal, however, could reverse its downward spiral and could damage the Justice Department's credibility in its ongoing Enron investigations.

Andersen tried to reach a plea bargain with the government, but could not agree on the terms. Hardin on Monday told reporters as he went into the federal courthouse that no settlement talks were being held.

"There will be a trial," said Hardin, a former death penalty prosecutor and Whitewater special counsel.

In January, Andersen admitted that employees destroyed thousands of Enron records and fired Duncan, a decision that came back to haunt the firm on April 9 when he pleaded guilty.

As a legal technicality, Duncan's plea is enough to ensure Andersen's guilt, legal experts said. But persuading a jury of that is another matter.

Prosecutors Andrew Weissmann and Sam Buell, who both made their names taking on organised crime, are expected to lay out in great detail Andersen's extensive document destruction and the months of discussion among top partners that preceded it.

The trial is expected to wrap up by the end of May, Harmon said.

The Enron collapse -- which erased billions in shareholder dollars and led the Houston energy trader to file the largest-ever US bankruptcy -- sucked Andersen into a vortex of lawsuits and government investigations that has left it on the ropes.

Several of its worldwide units have been sold to competitors and in the latest negative development, former Federal Reserve chairman Paul Volcker, hired to rescue the firm, said this weekend he had all but abandoned his efforts.

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