HOUSTON – Prosecutors in Arthur Andersen LLP's criminal trial rested their case Monday as the firm's lead lawyer challenged an FBI agent's assertion that the "vast majority" of nearly 30,000 deleted and recovered Andersen e-mails she examined were related to Enron Corp.
The agent, Paula Schanzle, was the last of 19 witnesses called to testify in the government's three-week case against the accounting firm.
Andersen is charged with obstruction of justice for shredding documents and deleting computer records related to Enron audits last year as the Securities and Exchange Commission began investigating the bankrupt energy company's finances.
Andersen says it was only cleaning up its files and getting rid of extraneous or redundant documents.
Testimony continued Monday on the order of U.S. District Judge Melinda Harmon, who last week decided the court would be in session despite the federal Memorial Day holiday.
Schanzle acknowledged under questioning by Hardin that she personally examined "more than half" of the documents and the "vast majority" of those "had something to do with Enron."
She previously told a grand jury the vast majority of the total were Enron related, but she testified Monday she hadn't been talking about the content of the e-mails.
In her testimony Monday, Schanzle also acknowledged that Andersen partners kept at least six copies of a potentially explosive e-mail that labeled a rundown of possible accounting problems at Enron as "smoking guns that you can't extinguish."
The e-mail, circulated in late August, contained an attachment of Andersen partner James Hecker's account of concerns Enron vice president Sherron Watkins had regarding troublesome Enron finances. He wrote the "smoking guns" message in the main e-mail.
Watkins, who once worked for Andersen, took her concerns to then-Enron CEO Kenneth Lay after speaking to Hecker.
Late Monday, Andersen lawyer Rusty Hardin began the company's defense by calling Richard Corgel, an Andersen executive based in Los Angeles, who testified about the firm's accounting and document retention policies.
Corgel said he discussed dealings with in-house attorney Nancy Temple, who prosecutors say was the instigator of widespread document destruction.
"Nancy Temple gave advice [last autumn] as to what we should be retaining for purposes of documenting our conclusions," Corgel said. Temple said the only documents that should be destroyed were outdated drafts of memos that were being currently updated.
As for older paperwork and computer files, Corgel said Temple wanted to "keep the trail" in place.
Prosecutors contend Temple's Oct. 12 e-mail advising compliance with the firm's document retention policy was a tacit order to destroy documents. Other Andersen workers have disputed that portrayal.
Temple declined to testify when called, citing her Fifth Amendment rights.
Corgel said he never heard anyone give an order to destroy documents, and that he would have questioned such a command.
Earlier Monday, Harmon heard arguments on whether to quash midtrial prosecution subpoenas for information regarding possible spikes in deleting e-mails on certain days last October. Prosecutors also want copies of actual work papers, or final documentation that accompanies finished audits, to determine what was deemed necessary to keep.
Defense lawyers maintain the analysis of spikes in e-mail deletions is unreliable because no one compared them with deletions on other days in 2001. They also say prosecutors have had access for months to 500 boxes of work papers under guard at Andersen's Houston offices.
Harmon said she would rule later on those issues.
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