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Thursday, March 21, 2002

Eugene Frauenheim, an Andersen executive, entered the plea before U.S. Magistrate Calvin Botley. About 500 employees demonstrated outside the federal courthouse, each wearing a T-shirt stating, "I am Arthur Andersen."

Employee Warren Wright told KHOU-TV the indictment was unfair to thousands of Andersen employees who had nothing to do with the allegations.

"I was explaining to my little girl this morning about why we were coming here," he said. "It's like someone in her first-grade class getting in trouble, and then not only having her whole school get in trouble but my son's middle school get in trouble."

The trial was scheduled to begin May 6 in Houston. It is expected to last three months.

If convicted, the corporation could be fined up to $500,000 or put on probation, which could mean restitution, a moratorium on certain types of business or other restrictions.

Andersen employees allegedly began shredding the documents Oct. 23 after Enron informed the accounting firm that the Securities Exchange Commission was investigating the energy trading company. Enron filed for bankruptcy Dec. 2.

In its indictment of Andersen, the Justice Department claimed that "tons" of documents were destroyed in the widespread shredding operation, largely carried out in the Houston office but also in offices in Chicago, Portland, Ore., and London.

"Instead of being advised to preserve documents so as to assist Enron and the SEC, Andersen employees ... were instructed by Andersen partners and others to destroy immediately documents relating to Enron, and told to work overtime if necessary to accomplish the destruction," the indictment stated.

Andersen called the indictment a "gross abuse of government power." It vowed to fight the charges.

"The action taken against Arthur Andersen by the U.S. Department of Justice ... is without precedent and an extraordinary abuse of prosecutorial discretion," the company said. "A criminal prosecution against the entire firm for obstruction of justice is both factually and legally baseless."

The indictment named no individuals. Justice Department officials said more charges might be filed.

Andersen performed accounting services for Enron for 16 years. It even had an office in the energy company's Houston headquarters.

The Enron bankruptcy was the largest in the U.S. history. The company's business practices are the focus of multiple investigations by the SEC, Justice Department and several congressional committees.

Copyright 2002 by United Press International.

All rights reserved.

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