Andersen Defense Wraps Up Testimony in Houston

Friday, May 31, 2002 is expected to be Big Five firm Andersen's last day of testimony in defending itself against an obstruction of justice charge brought by the U.S. Department of Justice. The week leading up to this final day has seen a parade of both former and current Andersen employees and partners explaining their interpretation of orders given to destroy documents relating to the Enron audit.

In Portland, OR, for example, Shane Philpot, a former Andersen manager who led the team handling the audit of Enron's subsidiary Portland General Electric, testified that he thought a reminder from Andersen partner David Duncan to adhere to the firm's document retention policy meant to retain documents. Mr. Philpot told his employees to retain "absolutely everything created," including "things that are garbage - documents we would normally throw in the trash can."

Former Andersen partner Emily Madison testified that she e-mailed Andersen executive Michael Odom on October 8, 2001 about firm policy regarding destruction of documents relating to a company that had fired Andersen as their auditor. Two days later Mr. Odom spoke in a videotaped training conference about the firm's document retention policy. The prosecution showed this video to the jury and argued that the video was created to give guidance to Enron auditors. Instead, Ms. Madison said she thought it was her question, completely unrelated to Enron, that prodded Mr. Odom into giving his directives.

The prosecution got some support this past week for its contention that the Enron document destruction was more than just business as usual when, on cross-examination, some defense witnesses stated that they were unfamiliar with the policy prior to last fall and that unprecedented quantities of documents from Enron files were set aside for shredding.

When the defense rests, the prosecution will have an opportunity to present rebuttal witnesses. It is expected that this portion of the trial will last until early next week and closing arguments will probably occur on Tuesday, June 4.

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