Andersen Exec: Firm Routinely Destroyed Documents to Prevent Misinterpretation

HOUSTON – Arthur Andersen LLP has a policy of destroying extraneous e-mails and documents partly because they can be used out of context in court against the firm or its clients, a top Andersen executive testified Tuesday.

Richard Corgel, North American practice director for the Chicago-based accounting firm, said casual notes, drafts and other documentation not relevant to audit conclusions should be destroyed in accordance with Andersen policy.

Plaintiffs' attorneys "don't always look in terms of providing a fair hearing with respect to evidence," said Corgel, the first defense witness in his firm's obstruction-of-justice trial, which is in its fourth week.

"Rather, I have found our clients and ourselves attacked on very small points taken out of context for which there is some 20-20 hindsight opportunity."

Prosecutor Andrew Weissmann asked Corgel about where the line would fall between material that is considered extraneous and material that might be useful to government investigators or others.

Corgel repeatedly said decisions on whether to keep or destroy records were judgment calls based on the expectation of whether the documents ever would be needed.

Prosecutors contend Andersen destroyed evidence related to its audit work on Enron Corp. in October and November because it knew some information would be damaging if uncovered by the Securities and Exchange Commission, which was investigating Enron.

Andersen has said it was merely cleaning up its files under a standing policy.

All Andersen witnesses who have testified, including former Enron audit partner David Duncan, who struck a plea bargain with prosecutors, said they did not think they were doing anything wrong at the time.

Weissmann and Corgel also argued over the term "smoking guns" used in several documents. Weissmann implied the phrase referred to paperwork or e-mails that could implicate Andersen for accounting mistakes, or even crimes. Corgel countered that "smoking guns" meant items that could be taken out of context by defense lawyers or prosecutors.

"Mr. Weissmann, that slang term is used time to time," said Corgel, who works in Los Angeles. "I would say our intent is that extraneous information not be saved."

Also Tuesday, Chad DeJohn, a computer technician in the Houston office's technology and risk consulting unit, testified about an e-mail he sent in early November in which he told his staff to immediately comply with the company's documents policy.

DeJohn, who had been designated as the unit's point person on compliance with the policy, testified that he set the deadline because he was up for a promotion and wanted to get the job done. He said he was not under any pressure from superiors to set the deadline.

Jennifer Stevenson, a manager on the Enron account, testified she kept a box under her desk that clerks emptied each Friday to shred its contents. Stevenson said the Enron audit team's offices often had too much extraneous paper.

She echoed other colleagues in saying she took an Oct. 23 request to comply with the document retention policy as an order to make sure audit files were complete and to destroy unnecessary items. Stevenson said she never thought the request was related to a federal investigation.