HOUSTON, Texas – FBI agents were at Enron Corp. headquarters in Houston on Tuesday to investigate allegations of document shredding at the bankrupt energy trader.
Meanwhile, U.S. District Judge Melinda Harmon prodded parties in a lawsuit against Enron to work out a plan to halt the destruction of papers. The hearing was primarily on a previous request to ban any shredding by Enron's former auditor, Arthur Andersen.
Harmon asked plaintiffs and accounting firm Andersen to discuss the problem and get back to her Wednesday. Andersen attorney Rusty Hardin told the judge the number of documents related to the case could total 20 million.
Congressional investigators announced Tuesday that they will subpoena senior officials of the Arthur Andersen auditing firm, including the chief executive and a fired auditor, to force their testimony Thursday in the Enron controversy.
Subpoenas are going to Andersen CEO Joseph Berardino, fired auditor David Duncan, attorney Nancy Temple and risk manager Michael Odom.
Ken Johnson, spokesman for the House Energy and Commerce Committee, said the panel's chairman, Rep. Billy Tauzin, R-La., would sign the four subpoenas Tuesday night.
Duncan was dismissed by Andersen last week for his role in the extensive destruction of Enron-related documents after federal regulators began investigating possible irregularities in the failed energy company's accounting.
FBI agents were inside the 50-story Enron headquarters Tuesday morning looking into the latest charges that Enron employees themselves destroyed documents. Enron spokesman Mark Palmer said they were on site at the request of attorneys for the collapsed company.
"We proactively offered our full cooperation in any investigation the Department of Justice might wish to conduct," Palmer said. He said the company thinks "such an investigation is properly done by federal authorities, not plaintiffs' counsel for benefit of a lawsuit."
"This is the shredded evidence that we got out of Enron," attorney William Lerach said as he carried a box of paper shreds into a courthouse for the hearing with Harmon. Lerach represents shareholders suing 29 current and former Enron executives and directors.
As for Enron, Lerach said he wants to take depositions from company chairman and chief executive Kenneth Lay and others about the allegations made public Monday of shredding at the company.
Enron bankruptcy attorney Melanie Gray argued that any rulings on taking custody of Enron's own documents must come from the New York bankruptcy court handling the company's Chapter 11 filing.
A state judge's order already prohibits Andersen's Houston office from shredding Enron-related documents. Chicago-based Andersen acknowledged earlier this month its Houston office had destroyed a significant but undetermined amount of audit-related work.
Enron cited Andersen's shredding issues when it fired the venerable accounting firm last week.
Late Monday, Lerach's law partner, Paul Howes, released a court brief in which a former Enron executive saw staffers in the accounting and finance department review and shred thousands of documents.
Maureen Raymond Castaneda, who was laid off as Enron's director of foreign exchange and sovereign risk, told Howes the "gather-review-shred" process started Oct. 31, when the Securities and Exchange Commission announced a formal investigation into Enron finances, and continued through at least Jan. 14.
Lerach said Castaneda took some boxes of shredded documents home, intending to use them as packing material as she moved to a more affordable house. She gave Lerach's team the spindly documents, which Howes said were clearly marked as related to debt-laden partnerships that fueled the company's downfall.
In a statement released Monday, Enron reiterated that it has had a strict anti-shredding policy in place since last autumn.
"Since Oct. 25, Enron has notified employees in no uncertain terms that they are to preserve all documents and materials. The company has sent out four e-mails to that effect from Oct. 25, 2001, through Jan. 14, 2002," said the statement.
"Enron's communications with its employees were very clear on the destruction of documents, and any breach of the company's policy will be dealt with swiftly and severely," the company said.
Castaneda confirmed she saw at least two such e-mails from Enron general counsel James Derrick.
Neil Rothstein, attorney for another plaintiff, the Archdiocese of Milwaukee Support Fund, said Tuesday morning that justice can be served only with intact evidence.
"We are entitled to see what they have," Rothstein said, referring to anyone with pertinent Enron documentation. "No one should have destroyed documents."
The Associated Press contributed to this report.