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Wednesday, April 10, 2002

David Duncan, Andersen's former top accountant, entered the plea before U.S. District Judge Melinda Harman and read a statement in which he admitted ordering documents destroyed. He signed a nine-page "Cooperation Agreement" with prosecutors.

Duncan agreed to brief the government on the shredding of records and appear as a witness if necessary in criminal proceedings. If he fully cooperates, prosecutors could recommend a reduced sentence.

"Such a motion will permit the court, in its discretion, to impose a sentence below the applicable sentencing guidelines range and also below any applicable mandatory minimum sentence," the agreement states.

The maximum sentence is 10 years in prison and a $250,000 fine.

The plea came only hours after the criminal information was filed against Duncan in federal court as part of the plea-bargain deal making Duncan the key witness in the government's prosecution of Andersen.

The one-paragraph criminal information charged that Duncan ordered employees of Andersen to withhold and destroy documents sought by the Securities and Exchange Commission in an investigation of Enron after the company began to crumble last fall.

Duncan, fired by Andersen in January, was the global managing partner in charge of Andersen's accounting services for Enron. Andersen worked for Enron for 16 years and even had an office in the energy company's headquarters.

The criminal information alleges that Duncan persuaded other Andersen employees to "withhold records, documents and other objects from an official proceeding" and "alter, destroy, mutilate and conceal objects with the intent to impair the objects' integrity and availability for use in such an official proceeding."

Duncan allegedly took the action between Oct. 23 and Nov. 9 of last year, after shareholders began filing lawsuits against troubled Enron and after the SEC began investigating the Houston company's financial practices.

Andersen was charged as a company with obstruction of justice by the government March 7 for allegedly shredding "tons" of documents relevant to the investigation. A trial is scheduled to begin May 6.

Andersen pleaded not guilty to the charges March 20. It labeled the indictment a "gross abuse of government power."

"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.

Thousands of Andersen employees have demonstrated against the federal indictment, charging that the government is putting an entire company and its employees in financial jeopardy because of alleged wrongdoing by a few people.

Andersen has struggled since the allegations surfaced, and the Chicago accounting giant has lost critical clients. Walgreen Co., the nation's largest drugstore chain, announced Tuesday it was dropping Andersen as its auditor.

Andersen announced Monday it would lay off 7,000 of its 26,000 U.S. employees.

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

Copyright 2002 by United Press International.

All rights reserved.

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